After spending two years, 2007 to 2009, as technical advisor to Jeff Bezos, CEO, Amazon, during which he was better known within the organisation as Bezos's "shadow", Amit Agarwal was made Vice President and Country Manager of Amazon's India operations. Agarwal tells Sunny Sen how he plans to scale Amazon's business in India. Edited excerpts:
Q. Why did you decide to launch Amazon in India?
A. E-commerce is in its nascent stage in India. But in general, humans do more of what is convenient and friction-free. So there is no reason why India will not be a large opportunity.
Q. How different is Amazon from other e-commerce companies?
A. I can talk about our approach. It's hard for me to compare because companies have underlying strategies that could be different. I gave you some examples earlier of competitor-focused, skill-forwards, customer-backwards approaches. But all companies have to think about customers. It's a question of what drives you on a daily basis.
At Amazon, we look at the key customer inputs that would remain constant for a long-long time - like vast selection (especially stock selection) choices, low prices, fast and reliable delivery and convenience. All our investments - be it the metrics that we track on a daily basis or the initiatives that we take - are intended to further these. Customer obsession must come along with other things - the ability to invent and the willingness to think long-term.
Q. Can you give me an example?
A. Take Fulfilment by Amazon (FBA). The offering is a classic example of a solution that is a win-win for customers, sellers and Amazon. If you look at seller inputs, sellers care about sales, cost of doing business. What FBA does is build a logistics infrastructure for sellers to be able to store their products, pick-pack and ship them. We handle the returns, customer service. All that sellers have to do is just decide on the product to sell, price it, pack it and ship it to our fulfilment centre (FC).
While doing a profit and loss (estimate) around this business, in my opinion, if you put a lens of one, two or three years, you would always come out with a view that this doesn't make sense. It allows them (sellers) to get great delivery experience. For example Amazon led the efforts in India to provide guaranteed one-day delivery. So all items in FBA are eligible for cash on delivery, guaranteed one-day delivery, free standard delivery, free pickup and returns and you get Amazon's customer service. If you look at the consumer side, consumers care about selection, fast and reliable delivery, convenience and FBA provides all of that to consumers.
Q. Is FBA or one-day delivery much easier to do in the US compared to in India?
A. The participants in this model (in the US) are more sophisticated and evolved because they have gone through a longer history (of ecommerce), than in India. So when you are working with carrier partners over here and trying to enforce a very high degree of reliability, in terms of shipping, when they themselves are evolving… When you look at warehousing in India, managing labour, driving service level agreements (SLAs), when you are saying to sellers you can put anything in a box and ship to us and we will ensure that the product gets listed correctly and ensuring that sellers follow a process so that you get what you expect so that you avoid issues downstream when customers receive the product… It's just that the level of participants is at a very different scale… Small inventions are needed and when they come together leading to system inventions, that's what execution is.
Q. How do you choose which categories to launch in India?
A. I think our job becomes a lot easier as we think the selection input is important to our customers. You basically need to find a way to sell everything. It's not a mathematical sequence that optimizes success. We think very long and relative prioritization of categories is not going to make a difference. That's how the team works. When we started, books was a very natural category as customers want books from us. We have a large number of Indian customers who go to Amazon.com to buy media products. It was a natural category for us to start as customers already trust Amazon. It was easy to go with books and get started. After that it has mostly been wherever our ecosystem partners are ready. We want to offer the best customer experience when people come to our store. We need to make sure the sellers are ready, fulfilment operations are ready, and the convenience features that are required for the category are ready.
Q. In India the competition is Flipkart, which copies you fast...
A. I will go back to the things that I had told you earlier. Ecommerce in India is in a very early stage. This is probably not even Day 1… Our approach is to relentlessly focus on the long term to offer vast in-stock selection of products, empower the sellers to offer low prices, fast and reliable delivery and convenience.
In a short period of six months, we are very excited, if you look at all these dimensions. In my opinion, what we need to worry about is to ensure that in a transparent world, customers choose us. That's what we want to ensure.
Q. Junglee came much before Amazon.in and it is a no-profit organization for you...
A. It doesn't charge anything today, but our goal for Junglee is not to build a non-profit business. Our current focus on Junglee is to build a great service - a service that earns consumer trust to find virtually anything. I can find anything here from furnishings, grocery, fashion, books, magnets etc. that are hard to find otherwise.
We want to earn seller trust that Junglee becomes a great amplification channel for them. Today, sellers can sell their products or advertise their products on Junglee for free. But we believe that if you build the right service and enable the right kind of interaction between both the parties, we can build several value-added services on Junglee that we could monetize. It is a very thoughtful business decision to build something that would make significant free cash flow in the long run.
Whenever you look at businesses from a short time scale, let's say three months or three years, you don't take the invention risks that you would if you have a timescale of 10 years. If you meet me after seven years, you would have a very different viewpoint versus if you look at it in the short term.