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The Creative Approach Amazon.com, Inc. Is Taking to Accommodate Indian Consumers

By Motley Fool Staff - Jan 28, 2016 at 4:24PM

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Amazon has some significant infrastructural hurdles to jump to get their goods delivered in India.

Internet retailer Amazon.com (AMZN -1.09%) is working hard on getting its products out to the millions of potential customers in India. However, India's infrastructure is vastly different from the United States', and Amazon's old techniques won't work in this new market.

In this video segment, Sean O'Reilly and Dylan Lewis go over some of the surprising ways the company is adjusting for India's vastly different delivery and payment infrastructure.

Listen to the full podcast by clicking here. A full transcript follows the video.

 

This podcast was recorded on Jan. 22, 2016.

Sean O'Reilly: So what's Amazon doing? I can't wait to see what Jeff Bezos is doing.

Dylan Lewis: First off, if this is something you're interested in, there was a fantastic article put together by Fortune -- it's called "Amazon Invades India," and that's an ominous headline, but it talks all about the various initiatives that they're putting in place, and how much they've had to adapt their business to handle what's going on there. So this is a quote from that piece: "About half the customers pay cash only --"

O'Reilly: What?

Lewis: "-- when their purchases are delivered."

O'Reilly: What?

Lewis: Amazon has partnered with thousands of small shop owners across the country to act as pickup points in exchange for receiving a small commission per package.

O'Reilly: Oh my gosh, Dylan ...

Lewis: Right. It's hard to believe, right?

O'Reilly: Oh, man.

Lewis: But this is the way they're adapting to this marketplace that is drastically different from ours.

O'Reilly: They do a little bit of that here, because you might not want a package sitting on your front doorstep if your door is on the street or whatever, so they have those lockers. They actually have Amazon lockers at the 7-Eleven up the road here. I keep talking about 7-Eleven in this episode for some reason. But this is like that to an extreme. It's like ...

Lewis: And I don't know that that is the sustainable solution for them. I think it's something they do now to gain a foothold, get people familiar with the idea of going onto this online platform and ordering. But down the road, they need to be doing something different. But I think one of the other really interesting things that article highlights is how different Amazon's relationship is with the native infrastructure of India and the mom-and-pop shops there, because, you think about how Amazon handles its relationships with mom-and-pop retailers here, and it's kind of an adversarial relationship, right?

O'Reilly: It's not a good relationship [laughs].

Lewis: Yeah. The dynamic is like, "Hey, man, what the heck? You just took all my sales! You're undercutting me! I don't want to help you out." But because --

O'Reilly: "Join us or die." [laughs]

Lewis: Yeah. But because so few people in India, not the majority, at least, are banked, and have credit card accounts or debit card accounts, they need to have these go-betweens as options. Another big thing that this Fortune article talked about was the delivery infrastructure in India, and how different it is. So they rely heavily on people basically out on motorbikes.

O'Reilly: I was about to say, couriers.

Lewis: Yes. Delivering packages. Part of that is because you need people that have a really solid knowledge of the area, because it is not the same kind of well-built-out and charted address infrastructure that we have here in the U.S. It's much more arcane, in a lot of ways. So you're seeing Amazon lean heavily on the local businesses and local knowledge here, whereas, for the U.S., they were able to just kind of throw it on their grid and have their way with the U.S. marketplace. So I thought that was just fascinating.

Dylan Lewis has no position in any stocks mentioned. Sean O'Reilly has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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