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How Amazon adapted its business model to India

Retail in Asia Amazon Chai Cart
Amazon's Chai Cart in India reached over 10,000 sellers.

In a tale of localisation, Vijay Govindarajan tells the Harvard Business Review how Amazon tailored its business model to India.

Amazon was fully aware that what worked in the US wouldn’t quite work in India, particularly because of the country’s more rural areas and population, undeveloped infrastructure, and policies restricting foreign multibrand retailers from selling directly to consumers online.

Despite all that, Amazon came up with innovative ideas such as the Amazon Chai Cart to reach thousands of small-business owners and teach them the ropes of e-commerce.

The Chai Cart team traveled more than 9,400 miles across 31 cities and engaged with more than 10,000 sellers. Now that’s a lot of chai tea going around. Amazon Tatkal was also created to help sellers get online quickly, which helped with registration, imaging, cataloging and sales training.

Amazon also implemented a centralized shipping platform (Fulfillment by Amazon or FBA) to store and distribute the products it sells, with two dozen warehouses to date in India.

On top of that, Amazon works with mom-and-pop stores to allow those in small villages to get online and shop from. When orders are made, they get a little cut, resulting in a win-win scenario.

Last June, Amazon committed to investing another $3 billion into its India operations, as online retailing in India is expected to surge to 175 million shoppers (3x the current number) by 2020.

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