Amazon.com founder Jeff Bezos pledged $1 billion in new investments to help take small Indian businesses online, as the world’s richest man pulled out all the stops to woo merchants and the government amid regulatory scrutiny and protests by traders.
The investments, said Bezos in a chat with Amazon India country head Amit Agarwal, will touch as many as 10 million small and medium businesses, including manufacturers, resellers, local offline shops and brands.
“This initiative will use Amazon’s global footprint to create $10 billion in Indian exports by 2025,” Bezos told a hall packed with Amazon executives and businessmen, who sell on its marketplace, and industry stalwarts at the company’s first Smbhav summit for small businesses.
As many as 3,000 small and medium businesses (SMBs), startups, and technology solution companies thronged the venue in Delhi from across the country to attend the two-day event, cheering Bezos as he spelt out his vision for India.
In another part of the city, a group of traders protested Amazon’s policy of offering deep discounts on products, a strategy the traders claim is aimed at bankrupting them and cornering market share. They held up posters that read “Amazon Go Back”.
But at Jawaharlal Nehru Stadium, the venue of the summit, thousands turned up to hear about the services offered by the e-commerce giant that has committed investments worth $5.5 billion since entering India in 2013.
“We are doing this now because it’s working. And when something works you should double down on it,” Bezos said, explaining his decision to invest in India and small businesses.
Amazon is currently battling Walmart-owned Flipkart in India’s small but burgeoning e-commerce market. The Smbhav summit is aimed at attracting more sellers and partners into its fold, especially as Mukesh Ambani’s Reliance Industries steps up efforts to digitize millions of kirana stores in India.
As part of its investments, Amazon will expand the reach of its existing Digital Haats in 100 cities, villages and communities that will help provide services such as e-commerce on-boarding, cataloguing and warehouse space for small businesses.
Amazon will also expand its Amazon Easy programme, which helps kirana shops set up kiosks to provide assistance to their customers in choosing the right product, place an order on Amazon and earn a commission in the process.
Amazon has been putting more resources to assist small businesses globally as well.
In 2019, the company launched 150 tools and services to help independent small and medium-sized businesses grow their sales in Amazon’s stores.
“New tools and services, along with infrastructure, programmes, and people, are part of the more than $15 billion Amazon is on track to invest this year to empower independent small and medium-sized businesses selling in Amazon’s stores,” the company said in August.
“At the end of the day, in the global supply market, as also in India, SMBs are a large part of the vendor base for any retailer, including for e-commerce players,” said Ankur Pahwa, EY India’s e-commerce and consumer internet leader. “Ultimately, the move to support digitization will help people move from offline to online from a transacting point of view. A lot of people in India are online, but they don’t transact. This can be seen as a case of assisted commerce for vendors to bring their products online and to help them transact online.”
This, Pahwa said, will help create opportunities in logistics, warehousing and better utilization of existing SMB infrastructure and digital data. This helps Amazon continue to create a strong ecosystem for retail and expand the online user base in the long term, he said.
The announcement comes as the retailer battles protests by small and medium businesses that have accused the company of unfair trade practices, including the use of deep discounts and giving preference to select sellers.
Earlier this week the Competition Commission of India ordered a probe into alleged competition law violations by Amazon and Flipkart over these complaints.
But Amazon remains unfazed. Gopal Pillai, vice president for seller services at Amazon India, said, “If we don’t create a level playing field or have a thriving marketplace, we would not have seen so many sellers on our platform. Numbers are telling a different story. We are always open and willing to talk to anyone.”
On the order passed by the competition watchdog, Pillai said that while he was yet to fully read the report, “we do not take any of these things lightly. We are compliant and will always be compliant. Even though it may have an impact on the business, we take compliance as the number one priority for us”.
Despite a surge in revenue and growth, Amazon India’s wholesale and marketplace entities posted a loss of around ₹5,800 crore in FY19. The company has also invested in offline retailers in India. Last August, Kishore Biyani’s Future Group said Amazon had agreed to pick up a 49% stake in Future Coupons, which holds about 7.3% in Future Retail Ltd, through convertible warrants. It also owns a small stake in Shopper’s Stop.
Earlier this week, Amazon infused ₹1,355 crore into its digital payments venture Amazon Pay India Pvt. Ltd and an additional ₹360 crore into Amazon Wholesale (India) Pvt. Ltd.