Today I wanted to buy "Yaana" a new kannada novel written by my favourite and famous writer S.L.Bhyrappa. Initially, I visited Amazon India website (I wasn't aware earlier that they do business in India), wherein the price mentioned for this book was Rs.190 plus shipping cost of Rs.45 adding to Rs.235. When I compared this with the price in Flipkart, I was surprised to know that they were ready to ship this at a total cost of Rs.181. How can Amazon charge 30% more than Flipkart in India and survive? I doubt!
This brings several questions to my mind. Firstly, it is very difficult for a foreign company to enter Indian market and make profit. The dynamics are different in Indian economy. Secondly, Flipkart has really established well thru its logistic network and become most efficient firm. Thirdly, there is so much more scope to realise cost efficiencies in the logistics business.
This reminds me of an Obituary article that I read last week in Financial Times about Odebrecht, most powerful construction business magnate of Brazil. When he moved from Germany to Brazil long back, after seeing Amazon jungle, he exclaimed, 'What a great logistics opportunity!'. This is very much true for Indian economy as well.
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