Eleven million people from all over the world have now funded more than 100,000 creative projects on Kickstarter. Together they’ve marshaled the power of community to support independent voices, turned imaginative ideas into realities, and begun to shape the world around us. Creators behind hundreds of these projects are getting a lift today thanks to Amazon Launchpad — a program that helps startups and other creators launch, market, and distribute their products to hundreds of millions of customers across the globe.
Getting a creative idea off the ground is often just the first step. Amazon Launchpad is a chance for creators to be discovered by new audiences, and to serve those audiences well by using Amazon’s retail expertise and infrastructure. The program offers custom product pages, comprehensive marketing support, and access to Amazon’s global fulfillment network.
So these are 3 big guns in the e-commerce sector in India in 2016:
As Vijay Govindarajan and Anita Warren point out, Amazon did not come into India and succeed by doing what helped it make the giant it is in USA.
When Amazon decided to enter the Indian e-commerce market, it was clear from the outset that something would have to give. That something was the very business model that had made Amazon an internet powerhouse in the U.S.
Especially Amazon being a foreign entity it had to play under different rules. Now the advantages and disadvantages that Amazon faced in India are highlighted as follows:
The good news: included a very young populace — more than 65% under age 35 — rising levels of disposable income, and ubiquitous cell phone ownership (80% of the population, by one estimate).
The bad news: 67% of the population lives in rural areas characterized by an underdeveloped infrastructure. Only about 35% of India’s population is connected to the internet. Cash, not credit cards or checking accounts, is still the rule. And, determined to protect its own, India enacted a rigid FDI policy restricting foreign multibrand retailers from selling directly to consumers online. That meant any venture would basically be a third-party seller for Indian-made products.
After launching India in 2013, Amazon India went about implementing it’s roadmap by doing the following things:
Educated the small-business owners using “Amazon Chai Cart” where it took it’s marketing people to the door steps of the small business owners to make them a part of it’s platform
Created “Amazon Tatkal“- a self-described “studio on wheels” that provides a suite of launch services, such as registration, imaging, cataloging, and sales training.
In U.S.A, Amazon uses a centralized shipping platform, which it calls “Fulfillment by Amazon (FBA)“, to store and distribute the products it sells. Sellers send their goods to Amazon’s fulfillment centers and pay a fee for the corporation to store, pick, pack, and ship their wares. They implemented the same in India as well.
Created “Easy Ship” whereby Amazon couriers pick up packaged goods from a seller’s place of business and deliver them to consumers.
Created “Seller Flex” whereby vendors designate a section of their own warehouses for products to be sold on Amazon.in, and Amazon coordinates the delivery logistics helping speeding up delivery.
Inked contracts with a number of major delivery services in the country, including India Post and cargo airline Blue Dart. Using bike and car couriers where needed. In 2015, they also set up a subsidiary, “Amazon Transportation Services Private Limited“, to augment delivery.
By making the small business owners especially in rural India as it’s partners, Amazon helps locals with no internet access go to the local store and use the owner’s internet connection to browse and select goods from Amazon.in. Then the store owners record their orders, alert customers when their products are delivered to the store, collect the cash payment, and pass along the money — minus a handling fee — to Amazon.
*Exceptions: Costco wine, $1 New York City pizza and the Blu R1 HD smartphone, now sold by Amazon for $50. In those cases, the quality of the product far exceeds your low expectations.
Yes, you read that right, there’s an Android 6.0 smartphone that costs less than family dinner at the Olive Garden. It’s cheap, but it’s not, you know, cheap.
There’s a reason for that. Even though Amazon sells the R1 HD for as little as $50, on the open market it starts at $100. Why the discount? Ads. Sorry, “special offers.” Which are ads.
Furthermore according to the article the bill of materials for this phone cost about $75, according to IHS analyst Wayne Lam’s. This is taking into consideration approximate costs such as $20 for the screen + $6 for both cameras + $7 for memory + $40 or so for the battery and core electronics.
The Samsung Galaxy S7 retails for a starting price of $650, but its bill of materials? $225! That’s not exactly an even comparison, Mr. Lam points out, since premium phones cost more to develop and market, but you get the idea.
Source: DREW EVANS/THE WALL STREET JOURNAL.
The thing that interests me here is the business model. I want to prepare a list for my own sake:
The biggest issue for Frugal Innovators is having the right business model.
Maybe it is so that scaling their solutions via volumes sold will take care of the margins.
Partnering with a bigger company can be a way to scale up.
Often selling at a low cost can also be subsidised with ads or products can be made accessible via low upfront costs and making them available for lease or rent