Amazon Prime may be a blow to Flipkart First, but win-win for online shopping in India

It is exciting times for the e-commerce space in India. Today, we saw two big announcements, and looks like each was intended to rain on the other’s parade. Flipkart’s Myntra unit acquired Jabong strengthening its position in the online fashion and lifestyle space, while Amazon announced Prime in India to further attract and retain users. Both moves are great and ultimately a win-win for consumers.

With Amazon Prime, the company is only trying to replicate its successful model in India, the regions it considers prime for its future growth. Amazon Prime members are believed to be revenue drivers for the online giant as they are believed to spend more than others, and stay loyal to the site. Though Prime in the US and UK, offers more than the free one or two day deliveries, early access to offers and same day deliveries, the company also promises to bring its streaming video and music services here soon. As an introductory offer, Amazon Prime is now available at Rs 499, and later will be increased to Rs 999. Now, membership-based models haven’t really worked well so far, like we saw arguably in case of Netflix or Flipkart First, there could be a shift in the paradigm. And, here’s why.

Amazon has been harping about customer experience ever since it entered the country, and why not. The online shopping platform has tried to put its best foot forward each time. I remember buying a Safari trolley bag and accidentally changing the pin that I didn’t ever recollect. Amazon executive shared the related Safari contact number (that I couldn’t get through), but didn’t stop there. He tried to resolve the issue, probably he looked through some methods online, out of which some I had already tried. But the effort was appreciated. It isn’t just about more deliveries or numbers, the game is changing and the focus should also be on customer service.

And Amazon Prime is only going to make it better for consumers - and for value conscious Indian users who are gradually shifting to online shopping - as the discounted one-time payment for quick deliveries could work. A latest Google-BCG report powered by Nielsen survey estimates digital payments to reach $500 billion by 2020, and contribute 15 percent to the GDP, with online shopping being among the top three drivers.

The company wants to further push its Prime services by adding streaming services, and Prime video is touted to be in the pipeline. If Prime Video is able to provide exclusive content coupled with other benefits, there shouldn’t be a reason why the new membership-based model may not work here. In fact, a recent Forbes report , pointed out how the company plans to push $300 million out of the $2 billion funding it received earlier into creating original video content for Prime Video.

Now, Amazon Prime will be essentially competing with Flipkart First that offers users free same day guarantee delivery, free standard delivery. But the same day guarantee delivery costs Rs 70 for the members, Rs 20 more than what Amazon Prime offers. Its customers get a Priority Customer Service or early access to deals and offerings. But returns, replacements and exchange policy remains the same. Amazon Prime will only further intensify the competition and the intensity will only compel Amazon, Flipkart and others to improve services that can be offered to customers.

In another example, Walmart is betting big on customer personalisation, which it believes is beyond celebrity endorsements, social media reviews and online searches. It has helped Walmart surpass the likes of Amazon and eBay in the ecommerce traffic race. And, with the government opening the gateway to foreign investment, players like Alibaba and Walmart could only make the e-commerce space better for Indian consumers.