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February 10, 2012

Is Amazon Expanding to India? Should Retailers Follow?

Amazon-india
Whilst Amazon are yet to confirm rumours of an expansion into India, history tells us that as or when they do, they will execute well. There is undoubtedly an interesting picture now evolving around emerging ecommerce markets such as India, where a combination of population, more affluent middle classes, increasing penetration rates and growth of mobile make for an interesting mix.


Set against a background of faltering domestic GDP and pressure to grow revenues, there can be a tendency to view emerging markets as an immediate, untapped opportunity. In reality, the devil (as always) is in the detail and UK brands and retailers should not be tempted to confuse population with opportunity. As with any cross border venture, consideration should be given to local elements that prevail, such as languages, currency, customer expectation, local payment methods (cash on delivery still widely used in India), duty, returns policy and mechanisms, prevailing fraud rates etc. Even cultural acceptance of distance selling should be factored in.

As the objective is to maintain a profitable channel, manage risk and protect brand integrity, entry strategy to any new geography should therefore be considered carefully and partnerships that solve this complexity are key. 

Where markets are more definable in terms of maturity, volume, expectations and risk, (e.g. FR, DE) the value is clear and can be fairly accurately forecasted. Marketplace as a channel can negate the high set-up costs associated with launching a local webstore. For more established businesses that already have a localised webstore, Marketplaces allow a fast track into traffic that has intent to purchase, leverages the long tail and complements the existing presence. 

In emerging markets, marketplaces may be utilised slightly differently, offering a means to allow brands and retailers to probe, establish traction levels and make data driven decisions to shape their localised commerce strategy. Utilising marketplace as a means to expose full or subsets of inventory to additional geographies, can generally represent a lower risk method of growing cross border business. 

Seamus Whittingham, MD EMEAOne thing is for sure, emerging markets are not a case of one size fits all and it shouldn't be regarded as an online equivalent of a gold rush. Relevance as always is key as emerging markets represent opportunity for a cross section of UK brands and retailers. For others it is definitely a case of keeping a watching brief, as the global ecommerce market continues to evolve.

 

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