Indians consistently prioritize price over brand recognition, and Amazon seems to have realised this trend. The e-commerce giant is strategically betting on its soon-to-be-launched low-price shopping platform, “Bazaar”, aiming to woo value-conscious customers across tier II, III and IV cities in India. Amazon Bazaar will reportedly offer an array of unbranded fashion and lifestyle products, encompassing categories like apparel, watches, shoes, jewellery and luggage, all competitively priced below Rs 600.
What’s more interesting is that Amazon Bazaar isn’t just aiming to entice budget-conscious shoppers; It’s also extending a warm welcome to sellers.
The operational phase of the Bazaar as a marketplace has commenced, with Amazon actively onboarding sellers and encouraging them to list unbranded products. These insights were revealed by ET, which meticulously reviewed the company’s communications with merchants.
Amazon’s foray into affordable, unbranded fashion and lifestyle products seems like a well-calculated response to the shifting dynamics of the Indian consumer market. The decision is primarily attributed to the declining demand for mass-market products, leading to a slowdown in Amazon’s growth trajectory within India. The surge in Indians opting for premium products, fueled by substantial discounts and bank offers, has further influenced this strategic move.
Currently, India’s online mass-market fashion segment has seen successful penetration by SoftBank-backed Meesho. Another major player in the space is Walmart-owned Flipkart Shopsy, operating through a separate app. Adding to the competitive landscape, Mukesh Ambani-led Reliance Industries is also actively working on a low-price platform, Ajio Street.
What’s In It For Sellers?
For sellers, Amazon Bazaar presents an enticing proposition. Amazon is putting forward a zero-referral fee for merchants, a critical incentive, particularly for products with a low average selling price (ASP). In addition, the company has removed closing fees for merchants using its Easy Ship service to sell on the Amazon Bazaar platform.
By eliminating referral fees and easing closing fees, Amazon creates an enticing environment for merchants who might have found the traditional commission structure a tad daunting. This opens the door for smaller players and unbranded goods, promising a treasure trove of diverse products for the price-savvy crowd.
“Bazaar is a new store on Amazon where you can sell your fashion and lifestyle products online at no extra charges, thus making it more profitable to run your business,” a document from Amazon to sellers said.
Affordability Over Immediacy
The delivery timelines for products on the Amazon Bazaar platform are anticipated to be approximately 2-3 days. This deliberate decision reflects a calculated move by Amazon, placing a higher emphasis on affordability over immediacy.
Understanding the mindset of the value-conscious consumer, Amazon acknowledges that a slightly prolonged wait of a few days is a minor compromise for the significant savings offered on the Bazaar platform. Therefore, the company’s focus on affordability aligns seamlessly with the preferences and priorities of its target audience, serving as a crucial element in its strategy within the competitive market.
Amazon Facing Competition From Local Players
Meesho, a significant player in India’s online marketplace, operates on a zero commission model with an average selling price (ASP) ranging between Rs 300-350. Its revenue model relies on advertising and logistics services to sellers, distinguishing it from Amazon and Flipkart, which manage their own warehouses and logistics.
Satish Meena, an independent e-commerce analyst and advisor at Datum Intelligence, notes that Meesho has effectively captured market share from Amazon, particularly in segments such as fashion and homecare. To compete in low ASP segments, Amazon must provide products akin to those offered by Meesho to both merchants and consumers. The analyst further observes that even Amazon Fashion in India has not replicated the success of Myntra, indicating challenges in finding the right approach for this market.
Therefore, the impending launch of the Bazaar marketplace is viewed as yet another effort by Amazon India to establish a stronger presence in the fashion segment and ultimately acquire new customers in India.
In January 2024, Amazon.com, Inc. infused Rs 830 crore (approximately $100 million) into its India entity, Amazon Seller Services. This strategic investment aligns with the company’s efforts to revitalize its growth in India, particularly in the wake of challenges posed by local players in the value-conscious segments.
The question remains: Will Amazon Bazaar weave its magic and emerge as the price whisperer of the Indian e-commerce market? Only time will tell, but the potential for transformative impact is undeniable. In smaller cities, it could evolve into a digital bazaar, brimming with affordable finds. The intensified competition in this segment could spark price wars, ultimately showering consumers with even more enticing deals. Let us know your thoughts in the comment section below!
