Amazon’s UK division has announced that it’s offering free Super Saver delivery to India. While that may not seem like a big thing, it’s actually an important move. Here’s why:
It’s possible to order and get some items delivered from eCommerce sites abroad to India. But the shipping costs play a major spoilsport. At times, the shipping charges might be 100% higher than the price of the product itself. That’s what makes Amazon’s announcement extremely exciting.
Foreign Direct Investment is not permitted in multi brand retail chains in India. That’s the reason Walmart and other major retailers from across the globe tie up with Indian companies to set up cash and carry outlets instead. Under the current laws, Amazon will also fall under the same category.
While the sales records of Indian eCommerce are not bringing down the roof, the segment is growing from strength to strength. In the past of couple of years, people have started shedding their apprehensions over using credit cards online. The debit card and Internet banking gateways have brought even those without credit cards (they make a huge chunk of customers) into the fold.
Every eCommerce site worth its salt has gotten venture capital and at times the prices are lower than the local shops. People are just throwing themselves at sites that offer free shipping.
If there is a right time to enter the Indian eCommerce market, it is right now. That might be the reason Amazon is promoting this offer to test the waters. There are two interesting things to note.
First one is the minimum amount of purchase. 25 Pounds is roughly equivalent to Rs. 1800, which for most of the middle class and the young crowd (the target group) with disposable income is next to nothing. So, Amazon is counting on people to atleast give the offer a go once, more like an impulse purchase. And am pretty sure they will. Actually I am going to order some CDs for myself this weekend.
Secondly, the terms of service says, at the end of the offer period Amazon reserves the right to extend, amend or withdraw this offer. The decision might be based on how fabulous the response is.
From the regulatory perspective, how far along Amazon can get away with this offer is a bit unclear. Indian Government allowed PayPal to operate in the eWallet space for years before the axe came down. Let us wait and watch.