We don't take pride in how much we can sell in a day: Amazon's Amit Agarwal

In a chat with Karan Choudhury and Nivedita Mookerji

Amazon saw the latest Diwali sales as a result of the customer acquisition it did in the last two Diwalis. Amit Agarwal, senior vice-president and country head (India), in a conversation with Karan Choudhury and Nivedita Mookerji said, “Significance of Diwali for us is like investment in the 401k plan that happens once a year where it will pay off for the next 12 months.”

Edited excerpts. 

How did this year’s festive sale pan out for you?

When we look at reputed studies such as IMRB that actually use a sample of more than 30,000 people across 200 cities to come up with monthly reports, we were the most visited site. More customers transacted on Amazon.in than any other website and more orders were placed on the site than any other. We had 44 per cent of customers and 42 per cent of transactions of the overall online landscape during the festive season. That was higher than anyone else. We also went back to last Diwali to understand if we are bringing the right kind of customers online and we found out that more than 70 per cent of customers that transacted on Amazon last year repeated this year.

You said Amazon had 42 per cent transaction of overall online landscape. Is it by volume or value?

By volume. We do not know market share by value because I have said repeatedly that the GMV (gross merchandise value) numbers shared out there are suspect. We do not even track that metric. But we track our relative performance; we have been growing 65 per cent to 85 per cent year-on-year. Our value during festive sales where we track GMS, which is net of taxes, returns, rejects, payment failures and GST, increased 4.5 times versus a normal month while the units increased 2.5 times. Our value increased two times more than units did.   

Do you think by value Amazon would have had the largest share during the festival sale?

I do not know because I would not speculate without data. In any case, it is like asking a marathon runner how he did in high jump. Our algorithms for website merchandising and deals are tuned to service products to customers where we see the highest propensity of customers returning after their first purchase, not on trying to sell that item. We do not take pride in trying to prove how many dollar bills or 50 cents we can sell in a day. We measure ourselves in how many orders are placed and how many of those customers came back. This is what in our opinion indicates growth in e-commerce versus what was sold in a day.

Your competition (Flipkart) has been saying that they have the largest share. What do you think?

I think they have not shared any statistically significant study to back their claim… I would be happy to look at statistically significant studies.

Since sales happen through the year, how significant is Diwali for you?   

Significance of Diwali for us is like investment in the 401k plan that happens once a year where it will pay off for the next 12 months. We see Diwali, Independence Day, Republic Day as excuses for us to reach out to customers where we want to bring new people online who have the highest propensity to continue repeating during the year. So it is significant from that perspective. The sales that we saw this Diwali for us were a result of the customer acquisition we did in the last two Diwalis.

From 2013, when your Amazon launched in India, to now, what is the kind of transition you have seen in the e-commerce space?

The big change has been that e-commerce is becoming a way to shop for anything. If we just look at the basket of customers on Amazon, we sell everything from detergent powder to smartphones.

How has consolidation impacted Amazon? Isn’t it down to competition between just Amazon and Flipkart?

E-commerce in India is a fraction of what it is in other geographies such as China. It will require investments over many years to make it what it should be where millions of customers are shopping for millions of dollars. It is still very early; there would be a lot of new innovations that would come, it is a long-term marathon. We have been just around for four years and in the US, where we have been around for 25 years, industry is as dynamic as you can imagine.  

Do you think it is now becoming a SoftBank versus Amazon fight in India? There are talks that the Japanese major may back a lobby of home-grown players. Your comments?

From our perspective, we are focused on our primary stakeholder — our customers. All these conspiracy theories or conjectures are a waste of time…

What is the kind of fresh investments Amazon is looking at for India market?

We will continue to invest aggressively. When you are trying to serve hundreds of millions of customers, you will have to build a foundation that does not exist. Everything, from logistics to supply chain, to empowering sellers, warehousing, payments infrastructure, needs to be scaled at a level that does not exist in India. It will require investment. Being the leader, we are committed to investing whatever it takes.

There are reports that Flipkart and Amazon have gone cautious on spending in India. Is that a correct reading?

We never disclosed our spending before that speculation, nor have we said anything after that. In general, Amazon is a frugal company. We see it as a responsibility to invest every rupee towards improving customer experience; that has always been part of our culture. Having said that, we will invest whatever is needed to serve customers. That viewpoint has not changed. 

Is it a good idea to have just two or three players in the e-commerce space?

I think you will see many entrepreneurs innovating in this area. We are quick at deriving conclusions based on short history. Many of the companies that are there today may not even exist 10 years from now.

Does that include Flipkart?

I think all of us are dispensable. Any company that is not focused on ensuring customers have a better experience, would at some point in time be irrelevant.