The additional six facilities will be built to accommodate the upcoming festive season sales, which will likely cause a surge in orders. The six centers will be scattered across Chennai, Delhi, Jaipur and Mumbai, adding onto the company’s existing ten centers in cities such as Nadu, Delhi and Punjab.
They will enable and boost capacity of SMEs in terms of expanding their customer base on a bigger scale. Smaller businesses will have access to Amazon’s infrastructure and deliver their goods to the company’s fulfillment center without having to worry about product packing and shipping. Outsourcing their products to Amazon fulfillment centers will therefore save inventory costs while they pay the company for storage space and fulfilled orders.
With the addition of the new fulfillment centers, Amazon’s operational FCs will have a storage close to 2.5 million square feet.
Amazon has recently overtaken its local ecommerce competitors in web traffic, whilst making significant investments in the country (around $5 billion) and owning 15% of the market share, as reported by Forbes. The company has also bought a stake in local player Snapdeal, which accounts for more than 70% of marketshare with Flipkart.
Amazon’s strategy of leveraging an upcoming festive season sale should prove to be successful as ecommerce sales tend to increase during festive seasons across the world, whether Ramadan in the Middle East or Black Fridays in North America.
The company’s commitment to opening 16 fulfillment centers in India highlights the demand for outsource fulfillment amongst smaller businesses who may be reluctant to invest in their own logistics and supply chain facilities.
A version of this article appeared in The Economic Times on July 7. Read the full version here.