Amazon has launched its Prime service, an offering that has helped it build customer loyalty and subscription revenue globally, in 100 cities across India.
Under this, Amazon will offer subscribers one- and two-day deliveries of all merchandise marked as Prime on its website and app, at no extra cost. It will also offer 30 minutes early access to daily deals on its platform, while users in 20 cities will be able to opt for morning and scheduled deliveries at a subsidised cost of Rs 50.
Apart from this, Prime users will also get access to Prime Video, its digital video subscription service (similar to Netflix), to be launched soon. The company is said to be looking to invest $300 million in India to develop original content and is reportedly in talks with Bollywood producers for the same.
The Prime subscription will cost users Rs 999 in India, but for now the company is offering it at a discounted rate of Rs 499. Users will also get a two-month free trial for the service as Amazon wants as many people to experience the benefits of swift delivery and deals, which will hopefully drive them to pay for the service.
In the US, Prime subscriptions account for a big chunk of the companyâ€™s earnings (it does not disclose this figure). Priced at $99.99 a year, it is estimated that nearly half (46 per cent) of US households have at least one member who subscribes to Prime.
In India, Amazon will be looking to woo repeat buyers with Prime. In the US, a typical Prime user spends $1,100-1,200 a year, nearly twice as much as the amount spent by a non-Prime user ($600).
Amazonâ€™s Prime service comes to India at a time when local rival Flipkart has put its Flipkart First service in cold storage. This was modelled around Prime within a year of its launch in 2014. Flipkart First offered faster free delivery for subscribers and other exclusive deals to its subscribers.
Amazon has been gearing up for the launch of Prime for quite some time. Recently, the company added six new fulfilment centres, taking its overall warehousing capacity in India up to 2.5 million sq ft across 10 states, making it the largest among Indian e-commerce players. This will help the firm make faster deliveries.
Flipkart, which grew to the top of the e-commerce charts in India on the back of its superior customer service, is said to have lost the advantage after it began focusing merely on growth. While the company has now rejigged its strategy to focus on customer satisfaction, Amazon has been able to catch up.