Amazon India on Thursday announced its plan to set up 10 new fulfilment centres across Delhi, Mumbai, Bangalore, Patna, Lucknow, Kolkata, Hyderabad, Chennai, Ludhiana and Ahmedabad as it gears up to cater to the surge in demand for online buying that’s usually seen during the festive season.
The company also said it was expanding seven of its existing fulfilment centres, which including the new additions, will increase Amazon India’s warehousing capacity by 20% to 32 million cubic feet, with a total floor area spanning 8 million square feet. With this, Amazon will have 60 fulfilment centres spread across 15 states. “The increase in storage capacity is in line with our long-term commitment to invest in India,” said Akhil Saxena, VP of Customer Fulfilment Operations, APAC, MENA and LATAM at Amazon. “With the expanded network of more than 60 fulfilment centers, we look forward to creating thousands of job opportunities with competitive pay.”
Amazon said that all its new fulfilment centres will be operational before the festive season, allowing customers to shop from the safety of their homes. It added that a few of these new centres will cater to large appliances and furniture, with capabilities to handle large loads.
The move to expand its warehousing capacity, which is typically carried out by etailers at this time each year, is of increased significance amid raging Covid-19 pandemic. Expansion of the fulfilment network is usually clubbed along with the hiring of tens of thousands of temporary delivery and warehouse workers.
Amazon had already announced that it would create 50,000 new seasonal roles in delivery and warehousing in May, anticipating an increase in demand for online shopping during this year. “In these challenging times and in post Covid-19 era, e-commerce will be a key driver of India’s growth and job creation. Physical procurement will give way to digital transactions,” said Amitabh Kant, CEO of Niti Aayog, in a statement.
While ecommerce firms such as Flipkart and Amazon saw a massive drop in sales during April and May when they were restricted to shipping only essential goods such as groceries and masks, the sector has seen a sharp recovery in June and July.
According to market researcher RedSeer Consulting, the annualised gross merchandise value (GMV) for the sector rose to $36.5 billion in June, a big increase compared to $30 billion in annualised GMV the sector recorded in January, before the Covid-19 pandemic struck India. The sector’s annualised GMV had plunged to $3.5 billion in April due to the government-mandated lockdowns. Moreover, RedSeer said the penetration of ecommerce in India’s retail market has gone up to 4.5%, up from 3% last year, as there's a systematic shift in consumers shopping online due to the pandemic.
Other experts and industry watchers also suggest that ecommerce firms could benefit significantly in the upcoming festive season as consumers continue to avoid venturing out. However, they say the scale of growth of ecommerce cannot be fully predicted as it’s linked to how well the consumer sentiment recovers and if discretionary spending is restored.