Worker stocking items at Amazon’s latest fulfilment centre in Bengaluru. (Source: Amazon India)

Amazon Strengthens Warehouse Network To Meet Festive Demand

The world’s largest e-retailer is going all-out to ensure Indian shoppers tap and click their way to brimming shopping carts this festive season.

Amazon.com Inc., with an eye on buyers from smaller cities, has opened its latest fulfillment centre in Attibele, around 40km from India’s software capital Bengaluru. The e-tailer has a network of such centres across the country that serve as storage for goods, which can be dispatched quickly whenever a customer purchases them on its online portal.

With the festive season barely weeks away, the move is also seen as Amazon’s response to meet increasing demand and expand inventory as it aggressively looks to narrow down the gap with homegrown rival, the Walmart-backed Flipkart.

“This is going to be the biggest festive season for Amazon India,” Akhil Saxena, vice president, customer fulfillment at Amazon India, told BloombergQuint, in an interview. Saxena said that the warehouse will enable small and medium businesses that sell locally-made products such as apparel and handicraft to market them online. “We have expanded our network by one-and-half times.”

Online festive sales in India, one of the world’s fastest-growing telecom markets, may not rival the U.S.’ Black Friday or Chinese e-commerce behemoth Alibaba’s Single’s Day sales in size, but they’re popular enough to cause website outages. Such is their popularity that over the years, Flipkart and Amazon India’s sites have crashed due to surge in visitor traffic.

It’s this popularity that the Jeff Bezos-owned e-company is betting on. This year, online retailers are expected to sell goods worth up to $3 billion—almost double that of last year—during the festival season, according to RedSeer Consulting.

Products getting  sorted before delivery. (Photographer: Nishant Sharma)
Products getting sorted before delivery. (Photographer: Nishant Sharma)

While Amazon doesn’t disclose the actual number of its Indian warehouses, its total capacity in India is 20 million cubic feet. Its newest centre covers 350,000 square feet. The U.S. giant has 380,000 sellers and 170 million products on its platform.

Sellers send everything from wallpapers and chocolate gift packs to colourful lights and handicraft coasters to the warehouses, where the items are quality checked, barcoded and laser-scanned for exact dimensions. Once products come in large numbers, they need to be sorted and stored for easy retrieval. That’s where automation comes in.

A computer algorithm helps slot and optimize storage, and goods are simply stowed where they fit. “The random sorting increases efficiency,” Saxena said.

When an order is generated, the product is picked and sent through long cavernous conveyor belts, after which it’s packed and segregated before getting shipped to the country’s far-flung corners. “A local customer can order the product by 1 am and can get it delivered by 11 am.”

To Hire 2,000 Contract Workers

The Indian expansion strategy is similar to the U.S., where a vast network of warehouses allowed it to offer fast, cheap delivery and distinguish itself from its competitors. Saxena said that they will hire close to 2,000 contractual staff over the next year for the new centre. Amazon recently launched a Hindi option on its portal, to target the next 100 million customers and make inroads in smaller towns.

The aggressive expansion is also testimony to the fact that Amazon is nearly done investing its promised $5 billion in India in about five years. A lot, however, rides on the upcoming sale, given this is the first time Walmart, the offline retail giant, and Amazon are going head-to-head in the country.