Amazon banks on India's smaller cities ahead of first 3-day Prime Day sale

Business Standard

5 days ago

Amazon is banking on India's smaller cities to fuel its next phase of growth, with non-metropolitan areas now accounting for up to 70 per cent of customer orders as the e-commerce giant prepares for its longest Prime Day sale yet.
The shift highlights a dramatic transformation in India's digital commerce landscape and Amazon's Rs 2,000 crore investment strategy to capture market share before rivals cement their positions in the country's emerging digital heartland.
Amazon India is launching its first three-day Prime Day sale from 12 to 14 July. This is backed by five new fulfilment centres in cities like Indore, Bhubaneswar, Kochi, and Rajpura, plus an additional site in Delhi-NCR. The expansion adds over 1.8 million cubic feet of storage capacity and reflects the company's broader push beyond traditional metropolitan strongholds.
'We see those markets as ones which are rapidly coming online and adopting e-commerce in a very big way,' Abhinav Singh, Vice President, Operations, Amazon India and Australia, told Business Standard, noting rising expectations for selection, convenience, and speed.
He attributed the company's deepening push into tier-2 and tier-3 cities to surging internet adoption and rising customer expectations.
Amazon is expanding its fulfilment and delivery network nationwide to meet growing demand for same- and next-day delivery.
He said the company is fully prepared for the three-day Prime Day event, backed by a strengthened operations network and recent pricing changes for sellers.
Amazon is also expanding its last-mile footprint across India's smaller cities, adding more than 30 new delivery stations in tier-2 and tier-3 locations such as Nagpur, Panchkula, Hubli, Mohali, Howrah, and Indore. This adds to the company's network of over 2,000 delivery stations and 28,000 neighbourhood partner stores nationwide. The move aims to boost delivery speed and capacity as e-commerce demand deepens beyond India's metro hubs.
Amazon's chief rival, Flipkart, is also aggressively expanding into smaller cities and scaling up its quick commerce service. When asked how Amazon's approach differs, Singh declined to compare directly with competitors. But he emphasised Amazon's customer-first strategy: 'We are focused on the vision of delivering the widest selection at the fastest speed to every single Indian. Our perspectives are not shaped by what any other organisation does but by what our customers want,' he noted.
When asked about unique operational challenges in places like Hubli or Howrah compared to Mumbai or Delhi, Singh noted India's rapidly improving infrastructure across regions. He emphasised Amazon's local approach: 'Our intent is always to invest in the local market,' he said. This is supported by a very wide network of hundreds of delivery service partners and trucking partners. He acknowledged the complexity of delivery cost structures in smaller cities but emphasised Amazon's long-term tech-driven strategy to address it.
Regarding customising fulfilment technologies or delivery models needed for smaller cities, Singh emphasised a hybrid approach. This includes using globally relevant solutions wherever they apply to India, while also building locally when needed. Citing India-first innovations like the 'I Have Space' programme with 28,000 Kirana partners, Cash on Delivery, and doorstep buyback, Singh noted that these models have since been exported to other markets.
Analysts say that India's online retail market could grow to $325 billion by 2030, more than four times the $70 billion recorded in 2022, driven largely by demand from smaller cities, according to Deloitte India.
Looking ahead, Singh sees continued expansion of Amazon's fulfilment and last-mile network, with deeper ties to India Post and Indian Railways, reinforcing speed, reliability, and safety across the country. 'We'll continue to double down on everything we've invested in over the past decade—with a consistent focus on associate and customer safety, speed, and reliability,' he said.