How Prime Video is turning the ecommerce wheel for Amazon

Sunny Sen July 14, 2017

It wasn’t a coincidence that on July 10 when ecommerce giant Amazon unveiled its first Prime Day sale in India, Inside Edge, its maiden Indian Original series, was aired on Amazon Prime, the company’s video streaming platform.

Based on cricket’s T20 format game, the series is plotted around sex, drugs, scandals, battles of power and control, relationships, politics, and, of course, cricket. “We are an entertainment loving country… And what better than a combination of Bollywood and cricket,” said Nitesh Kripalani, director and country head, Amazon Video (India).

Most media and social media companies play the ABCD — astrology, Bollywood, cricket and divinity — card to reach out to 1.3 billion Indians. Of these, Amazon has managed to marry two — cricket and Bollywood — with commerce.

Most media and social media companies play the ABCD — astrology, Bollywood, cricket and divinity — card to reach out to 1.3 billion Indians. Of these, Amazon has managed to marry two — cricket and Bollywood — with commerce  

Early signs are that the bet may be paying off with Prime Video helping turn the ecommerce flywheel faster at Amazon India.

Amazon introduced Prime subscriptions in India in July 2016 as a membership programme that guaranteed quicker delivery (two to three days) at an annual subscription of Rs 499 (one-twelfth of what the subscription costs in the US). Often described as the world’s best customer loyalty programme, Prime is Amazon’s biggest hook for customer retention and could help it take a lead in India’s $30 billion ecommerce market, expected to reach $120 billion by 2020.

Prime Day is a global event, when Amazon’s Prime members get exclusive access to lucrative deals and discounts on the platform. “Prime is a multi-benefit customer service, which offers exclusive deals, early access and unlimited content,” said Kripalani.

Also read: Amazon Prime Video wants to raise Indian television from the dead

Amazon does not give a split of video consumption and product commerce for its Prime members, but Kripalani said that since the launch of Prime Video in December, Prime subscriptions have doubled. “Video improved the signing up rate twice as much. People shop more and they watch a lot of videos. A significant number of users use both,” said Akshay Sahi, head of Prime, Amazon India.

Data from App Annie shows that since the launch of Prime videos Amazon has been able to widen its gap with Flipkart on monthly downloads of their apps. In November, Amazon’s downloads were 3.05 million, versus Flipkart’s 2.65 million (a lead of four lakh). In April, the Amazon’s downloads were 3.47 million, versus Flipkart’s 2.13 million — the gap widened to 1.34 million.

Among the 200 territories where Amazon has launched Prime, India’s growth has been the highest since December 2016
Among the 200 territories where Amazon has launched Prime, India’s growth has been the highest since December 2016

Among the 200 territories where Amazon has launched Prime, India’s growth has been the highest since December 2016, said Kripalani. “Our goal is to change the way India buys and sells.”

There is no clear binary trend, to be sure. “Some people sign up for faster shipping and others for videos,” Kripalani explained. Amazon Prime Video counts Netflix, Hotstar, Jio TV, Jio Cinema and others among competitors. Amazon Prime was ranked No 5 in an App Annie report based on data for the last six months of 2016.

“Video improved the signing up rate twice as much. People shop more and they watch a lot of videos. A significant number of users use both” — Akshay Sahi, head of Prime, Amazon India  

Six days ahead of Prime Day, Amazon Prime Video launched six new and exclusive titles including Star Trek — Beyond Darkness featuring Benedict Cumberbatch, Sully,  featuring Tom Hanks; Deepwater Horizon; and stand-up comedy special by Zakir Khan Haq Se Single, among others.

For Prime Day, Amazon partnered with movie ticketing platform BookMyShow, food delivery app Swiggy and travel website MakeMyTrip for special deals and discounts. It also offered special cashback on HDFC cards and on Amazon Pay wallet. More than 30 brands launched thousands of products, from electronics to apparels, and toys to grocery.

“We have sourced thousands of the best deals… much better than what we did on Diwali,” said Sahi. For perspective, Diwali was the biggest sale for Amazon in its history in India. It sold every from churan (ayurvedic digestive tablets) and hing (asafoetida) to apparel and electronics. The Prime catalogue in India is already up to 2.1 million products from 1.3 million when it started.

Transaction details, rise in users, and other Prime Day statistics were not available at the time of publishing of this article.

Multiple vectors in the flywheel

Market watchers feel that the combination of video, product and payments is playing out for Amazon. “This is economies of scale (at work)… cost of customer acquisition goes down and the wallet size per customer goes up. Amazon is able to cross sell a lot. Combine that with Amazon Pay, it becomes a wallet to buy many services,” said Sanchit Vir Gogia, CEO and chief analyst at Greyhound Research consultancy firm.

Prime has also led to adoption of Amazon in smaller towns and cities. “In May, our new customer base in tier II and III cities went up by 235%, and Prime was the largest selling product,” Sahi said. The absolute number of customers was not revealed.

In an entertainment-crazed country (more than 1,600 movies are made a year in India, per last count), Prime Video may be working better than it did for Amazon elsewhere in the world. “Video keeps the customer engaged and our goal is to offer the latest videos and Originals, not only in English and Hindi, but also in four other regional languages,” said Kripalani.

“This is economies of scale (at work)… cost of customer acquisition goes down and the wallet size per customer goes up. Amazon is able to cross sell a lot. Combine that with Amazon Pay, it becomes a wallet to buy many services” — Sanchit Vir Gogia, CEO and chief analyst, Greyhound Research  

But, what about bandwidth? A large number of mobile internet users are still on 3G and 2G connections, which makes it difficult to stream videos, risking Amazon’s promise to offer high-quality video and an everything store for products.

Amazon worked on a series of initiatives to Indianise itself in the video space. To start with, India is a pre-paid mobile phone market — accounting for more than nine in ten phone users. “We looked at allowing customers to choose what quality of video they want to watch. Amazon Prime consumed less data than any other video streaming platform,” Kripalani said, without more detail.

Also read: Netflix is betting on its recommendation engine to get an edge over Prime Video, Hotstar

Data Savers, a programme that was launched in India, now has been taken globally. This allows Amazon’s backend technology to capture the available bandwidth and adjust video quality accordingly.

Throw in the local content. “Nowhere in the world content is available in six languages, or 18 Originals have been announced at the time of launch,” Kripalani said. In some cases, like for the movie Hindi Medium, starring Irrfan Khan and Saba Qamar, was first broadcasted on Prime before being aired on television.

In the third quarter, Amazon will launch Breathe, a psychological thriller starring R Madhavan and Amit Sadh.

 


Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.