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Amazon is yet to get ‘on’line in India...

Monumental has been the impact of online retailing on the fortunes of quite a few companies. One such destination is Amazon.com. Recently, the company reported a sky-rocketing second quarter net profits of $78 million (from $22 million for theprevious year), which is as high as three-folds, compared to the last quarter in 2006. And this was despite a relatively modest rise in sales of 35% to reach $2.89 billion.

A majority of Amazon’s sales comprise electronic products and other general merchandise items, which grew in revenues by 55% to $970 million and accounted for 34% of overall business. As far as media is concerned, the book sales at Amazon rose by 27% to $1.8 billion, which included over two million pre-orders for the final edition of Harry Potter book, globally.

Retail analyst, Nolatpal Chakravarti, does agree that e-retailing is a growing concept that the industry is now quickly adopting. With respect to electronic goods being a major part of Amazon’s revenues, he comments, “As far as electronic goods are concerned – mostly comprising e-sales – the trend is not going to sustain longer, as other segments would contribute equally in the future.”

The trends of online-retailing are much visible in regions like North America & the UK as sales by Amazon are up by 38% for the former & 31% for the latter. There is, however, one bastion that still eludes retailers like Amazon – fast developing markets like India & China. On this, Chakravarti adds, “Countries like India & China are still struggling hard due to perception of people to physically feel the product & then purchase.” Concerns of credit card frauds only complicate the matters here. Just can’t win them all, eh?
Edit bureau: Disha Gandhi

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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