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Establishing Amazon.

in as leading player in Stainless Steel Market


Rahul has been just appointed as the ‘Director of Kitchen’ category for Amazon India. His category has
been growing at a slower pace vs amazon platform YoY. To unlock the next level of growth trajectory for
his category, his eyes are set on Stainless Steel market (B2C). Stainless steel B2C includes tools, storage,
cookware, bottles and table top (beverage ware, serve ware and dinner ware or Housewares) refer
Appendix. Stainless Steel is INR 15,000 Cr industry in India while close to minimal penetration in online
marketplace. Stainless Steel is a highly fragmented industry with close to 6,000 organized and
unorganized manufacturers. Most of these manufacturing units are setup in Delhi, Mumbai,
Ahmedabad, Chennai, Thane, Pune, Jodhpur, Kundli and Jagadhri. Close to 80% of this market is catered
by less known small players. Presence of national/regional brands is limited to 3-4 brands. Market share
of Amazon in 2018 was less than 1% with limited assortment. The plan is to achieve 5% market share by
2022 with more than 1 lakh assortment.

Customer behavior
Indians love stainless steel utensils because they are relatively cheap, long lasting and can withstand the
abrasive and corrosive way of cleaning better. The lower thermal conductivity of stainless steel actually
works as an advantage because the food is heated more uniformly. Currently, most customer buys the
products from offline market by evaluating the utensils on weight, feel of the surface, thickness, shine,
design etc.

“Every retailer/wholesaler that I visited was selling products in loose (priced at per kg) and used a
weighing scale to highlight the difference between different gauges of stainless steel for similar sized
products”, said Ms. Sheela who visited a shop to purchase steel utensils.
“Most retailers translated the price per kg to the number of utensils that I wanted to purchase and some
had fixed prices for a set of 12 plates, 6 vegetable bowls etc.”, said Mr. Deepak who went to buy a
dinnerware for his home.

Sellers offline are flexible enough to sell products in loose (customers have the flexibility to buy 1 plate /
1 steel glass etc. Some retailers use product polish/finish as a feature to demand higher price for similar
gauge/thickness/weight products. Currently, this experience and capability is not possible in online
model.

Seller experience
While there are 200K steel traders in India, very few are trying to list their products online.
“I have been running this shop for last 30 years, am not highly educated and I find it difficult to operate
smart devices. My staff is equally handicapped when it comes to digital literacy. Therefore I don’t want
to explore online”, said Mr. Bhaleria, manufacturer of Steel products
“I have my shop established in Chikpet in Bangalore. I buy in bulk and sell to the customers. I don’t know
how to sell it online? How will customer buy online? If customers expects something else, he will return
my product”, said Mr. Gandhi, a retailer in Bangalore

Profitability
While there is a clear opportunity to penetrate the SS segment, Rahul is worried if Stainless steel
business will be profitable for him on Amazon or not. For the purpose of this case only, Rahul earns a
small percent as commission fee from sellers, and he also incurs a high shipping charge per shipment. He
is not sure if low price products will be profitable for him.

For his leadership meeting, Rahul needs to present answers to following questions:
1. Who is the customer for stainless steel utensils on Amazon?
What should be the purchase experience (discovery of products, enhancement of products page
experience to drive purchase etc.) of customers on Amazon? How can we address the concerns
of a customer who is used to buying offline?
2. How do I convert offline customers into online steel customers using different levers of
marketing? How do I keep them engaged in stainless steel category?
3. What should be the path to 5% market share by 2022 (including 4 year projection of industry
size, Amazon business, and profit)?

Appendix

Average retail outlets in metros - 200-500


Average retail outlets in other cities: 50-80
Average retail outlets in villages: 1/10 villages