Welcome back to the new week. Let’s kick it straight off with a thought experiment: if Amazon India sold its products through stores instead of online, what do you think it might spend on real estate rentals?
A couple of hundred million dollars, perhaps? Less? More? Okay, let me add another factoid: what if I told you that its customers made over 400 million purchases from those imaginary stores?
A billion dollars?
Let’s unwind our experiment now and come back to the real world of Amazon—one where it sells “everything” through its website and apps. With all the money it “saved” from not setting up and running stores all across India, it can now offer discounts to its customers, who will then love buying online because it’s cheaper and more efficient. Since Amazon doesn’t have stores which customers can walk into, make purchases and walk out of, it must now send products bought by customers to their homes and offices. But surely it has to be cheaper than running stores all over India?
In the year ended March 2020, Amazon India spent nearly one billion dollars in fulfilment costs to do so. On average, each shipment it sent cost it Rs 130 ($1.74) in fulfilment costs. That’s just one of the many previously unreported nuggets of valuable information on Amazon India buried in today’s article. Wanna know how much of that was attributable to the corrugated boxes, plastic bags, tapes, labels, and just anything that comes with your Amazon-branded courier package? Also, in the story - At some point in the future, Amazon India, its peers, and Indian customers will need to have a reckoning on these costs.
They’re just not sustainable in the long term