Amazon India launch could provoke price war

Allegro Capital's digital media practice director Deepak Srinath told ZDNet that Amazon is going head-to-head with Flipkart in the key categories of books, and movies and TV shows.

 

Srinath said the launch could start a pricing war.

 

"Indian e-commerce consumers are very price and value conscious so price points are going to be a big factor. Anyone buying a book or a similar product on Flipkart is now going to compare prices on Amazon as well."

 

An online shopper based in Bangalore, Abhishek Vaid purchased two classic novels, on the first day of Amazon's operations: "Don Quixote" and "The Sound and The Fury". Despite being a longtime customer of Flipkart, Vaid said he felt no loyalty to the brand.

 

"The books were 55 cents (30 rupees) cheaper on Amazon. I also wanted to experience what it's like to order off Amazon, their delivery times and level of service," he said.

 

At the time of publication, the hardcover version of the Steve Jobs biography by Walter Isaacson was selling for US$11.28 (609 rupees) on Flipkart. The same version was US$10.98 (593 rupees) on Amazon. Both sites offer free delivery within two to three business days, and an option to pay cash after the item was delivered.

 

Allegro's Srinath said that Amazon has invested a lot of time and money building a strong logistics network in India, which centers around a distribution hub on the outskirts of Mumbai. The Indian government has barred Amazon from storing and selling its own inventory of products. It simply manages the fulfilment process for Indian retailers.

 

He said that Flipkart, which has raised US$180 million funding, has had sufficient time and resources to develop its own warehouse and delivery systems.

 

Srinath pointed out Amazon's launch will accelerate the transition of Indian e-commerce websites to marketplaces, which was forecast in a recent Allego Capital report.