Amazon India recently received the green signal from the Reserve Bank of India to go ahead with launching a new digital payments service in the country. Only a few months ago, Amazon put in Rs. 150 crore into its payment business in order to ramp up and cash in on the move towards a cashless economy.
Amazon India head Amit Agrawal discussed the intense growth of the Amazon Prime program saying that the number of people using the platform has doubled since the beginning of this year. He mentioned,
One out of three units that are shipped by us are ordered by Prime customers—so, we’ve reached a point where we see a healthy loyalty that is allowing people to buy more and more. Just the Prime spend between January and May increased 100%—so our loyal base is buying more and we’re getting healthy customer inflow. If I look at the sale event in January versus May, it shows they’re shopping more
Regarding the new digital payments service, Agarwal refused to share details. Amazon India has been operating in the country for over four years now and had applied for a prepaid payment instrument (PPI) license almost a year ago. It has been speculated that the new service will have a wider reach than what Amazon Pay currently has. It will be used for other transactions other than those only on the Amazon platform. Agarwal added,
All these areas are very early in their life cycle…Our most important priority for our payment investments has been to improve the experience of customers on Amazon.
In that sense, this [PPI] licence allows us to provide a more cashless experience and a more convenient experience to our customers. It will allow us to move customers away from a cash-based or payment on delivery-based segment to a more prepaid digital segment. That’s our primary priority. Of course, we’ll try different experiments and see what happens.
Amazon’s customer base has started increasing with the addition of the Prime service. The influx of new users comes mainly from tier II and tier III cities. It has been estimated that approximately 60 percent of Amazon users are new to the platform and 75% of this number comes from lower tier cities. The company lists close to 100 million products anareis steadily adding about a hundred thousand products to its inventory every day.
According to Agarwal, Amazon’s commitment to invest $5 billion in its India market will be mainly in the areas of technology and infrastructure — with the aim to gain another 100 million users. The American e-commerce firm views India as its most significant international markets and has seen an 85 percent increase in sales in past three months. This growth rate is well over the speed at which the overall market itself is growing.
Despite entering the market years after its main competitors Flipkart and Snapdeal (who’re now looking at a possible merger of the two homegrown entities), Amazon is still going strong and is at par with the current market leader Flipkart.