India gets new ‘experience centers’ in Amazon expansion

AMAZON is expanding its presence in India through retailer Shoppers Shop Ltd., which it recently acquired, and will be helping the domestic company boost its revenue and store presence in an effort to claim more dominance in South Asia.

India is well-known to have a weak e-commerce compared to neighboring China, but Amazon is looking to change that. The e-commerce company is locked in battle with homegrown brands such as Flipkart, who dominates the majority of the industry’s online retail at the moment. Amazon, on the other hand, is looking to push itself in the smaller towns across India, and in order to accomplish that in India’s weak Internet reality, they’re turning to good old brick-and-mortar retail.

Shoppers Stop will be creating what they’re calling “Amazon experience centers” within their 80 nationwide physical stores, according to Bloomberg who reported that the local company would be selling 5 percent of its company to the American giant for INR1.8 billion (US$28 million). Customers will be able to access and test out products available on Amazon’s online platform.

There are plans for 20 more stores over the next four years, and is designed to help Shoppers Stop tap into Amazon’s massive 400 million monthly visitors. Shoppers Stop has stores in mostly small cities all across South Asia, such as Durgapur, Aurangbad and Kolhapur, and sells a variety of products such as cosmetics, apparel and home appliances.

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Following this buy-in from Amazon, Shoppers Stop will be given an exclusive digital flagship store on Amazon’s India site, thus helping it expand its reach even further into the digital age. Leveraging on the undertapped potential of these smaller cities, Shoppers Stop will be looking to raise as much as 10 percent of revenue from its online sales by 2020 from its current 1.2 percent.

“The partnership with Amazon will really accelerate our revenue from online sales and we expect it to double every year for the next three years,” Shrikhande, said in an interview with Bloomberg.

“Amazon will give us space in its fashion segment online where its users will have access to about 400 brands from our catalogue.”

For Amazon’s part, they’ll gain access to a network of brick-and-mortar stores in less developed parts of India, where credit card and Internet penetration is pretty low. Furthermore, partnering with a local brand could have a positive effect in a country where pride in homegrown business is relatively high, and has driven the popularity of domestic services over foreign intrusions.

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Amazon has been working to succeed in India, and circumvent the power of local retailers who have homeground advantage. The e-commerce giant was ousted from China by the dominance of companies like Alibaba Group Holding Ltd. and JD.com who leveraged huge networks and deep local knowledge to rout Amazon.

Amazon founder and CEO Jeff Bezos has pledged US$5 billion to its expansion strategies in India, and this ppartnershipwith Shoppers Stop marks the companies first investment in a publicly-listed retailer in India.

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