As reported before, Amazon does not allow local currency payments on many items, and does not accept local payment methods for most.
India may have just put a spacecraft in orbit around Mars, and it may have a bigger smartphone market than the USA, but it is also a land of desperate poverty, where most of the population have no access to the credit cards Amazon expects to be paid by.
Countless millions of Indian consumers now have a device in their hand that could have your ebooks on, and yes, the Kindle app is free, but if you cannot pay for the ebooks in the Kindle store, why bother? Go to another retailer, like Flipkart, that understands customers living in India and buying products in India want to pay in Indian currency with local Indian payment methods.
Flipkart is currently the e-commerce titan of India, with an estimated eighty percent market share. It recently raised $1bn in a funding round to expand further.
Days before the Flipkart funding was announced Jeff Bezos had laid out Amazon’s plans for India, with investment in new warehouses, etc. Then Flipkart announced the new $1bn extra funding.
Not to be outdone, Jeff Bezos was there the next day saying he would be investing $2bn. No mention of this days earlier in the announcement on Amazon India. Bezos just magicked two billion dollars out of the air to play one-upmanship with a rival store.
Which is fine if the company has money to throw around. But this is a company that, on its own guidance, is about to report a half billion dollar loss for just one quarter!
No surprise then that just weeks after Bezos publicly stated he would throw another $2bn into India Amazon went cap in hand to Bank of America to borrow, wait for it… $2bn. Two billion to add to the already heavy debt Amazon is carrying. (LINK)
No surprise either that the news was snuck out after business hours on a Friday…
But let’s get back to India. Because weeks after saying he would splash the cash on the subcontinent Bezos hit another hurdle. Actually, make that an obstacle course.
India’s authorities clamped down first on western companies (not just Amazon, let’s be clear, but also Google, eBay, etc) not using local payment processing and to stop them demanding payment in US dollars.
This amid a wider investigation into Amazon’s conduct in the country, amid widespread reports that Amazon wasn’t playing by the rules.
Then as September drew to a close the Indian authorities stepped up their investigation. The Enforcement Directorate has issued orders to over 100 Indian business telling them to stop using Amazon to store goods in Amazon Fulfillment warehouses. (LINK)
In response Amazon warned it may now have to close some warehouses on the sub-continent, but casually explained it was all India’s fault.
“We understand this to be a case where the laws have not kept pace with the new-age online business models,” Amazon said.
So that’s alright then. Who cares about a country’s laws when they conflict with Amazon’s business model…
Google, on the other hand, has responded to the Indian authorities’ concerns in typical fashion: glocalization.
It’s not signed, sealed and delivered yet but Google is about to ink a deal with India’s biggest telecom operator Aircel to allow carrier billing for its products bought through the Google Play India store. (LINK)
For those unfamiliar carrier billing is simply where anything you buy online is added to your phone bill or deducted from your phone credit. No need to have a bank account or credit/debit card, or to share those details with the seller.
It’s a bitter irony that Amazon should be criticizing India for failing to keep up with new-age on-line business models when Amazon is still stuck in the last century when it comes to payments options on its own sites.
America is way behind the rest of the developed world in still using credit cards as the norm, and even at home that poses a problem for online retailers as many millions of Americans are without banking facilities thanks to credit checks and similar conditions. Wal-Mart has just this past week stepped in to help solve that problem with its new Go Bank checking account.
But for the less-developed nations the ability to pay by credit/debit card is a luxury even fewer enjoy. Which seriously hinders the development of on-line retail around the globe.
Vietnam, for example, sees just 1% of financial transactions made by card. In the Philippines it’s just 5%. 12% in Thailand. 37% in Singapore. Not that indies in KDP Select need be concerned, as Amazon blocks downloads to these countries anyway. No, that’s not anti-Amazon, simply fact. Google Play is in all of them. Not pro-Google. Simply fact.
Even for key nations like the BRIC countries, which are the current focus of the western retailers’ attention, it’s not good news for those stores that can’t be bothered to glocalize.
Amazon is rumoured to be edging closer to a Kindle Russia store. Great news if true, but less than 40% of Russia’s urban young people use credit cards. For the general population the figure is negligible.
Amazon will find in Russia that, just as in India and Brazil, by refusing to glocalize it will hinder, not encourage, consumer interest.
In India credit card penetration is just 2%. Give the size of the population that’s no small number of people, but it effectively excludes 98% of the population from buying from the Amazon India store at all. And for those who do have cards they are likely to get lumbered with extra costs from currency exchange fees, etc, because many purchases can still only be made in US dollars.
The carrier-billing deal between Google Play and Airtel will mean every one of Airtel’s 40 million data users with a smartphone will be able to access anything in the Google Play store and have the payment taken from their cash-purchased Airtel credit top-up.
Easier than One-Click. Especially since Amazon doesn’t offer One-Click in India.
Google Play currently offers carrier-billing in 26 countries – almost half of the Google Play stores – and is actively working to reach more.
That said, Google Play is late to the game in India. We’ve mentioned before that the real ebook players in India are likely to be the upstart start-ups focussed on m-commerce, like Newshunt (LINK) and Rockstand (LINK).
Neither of these stores are currently easily accessible to indies, but keep an eye on them and jump in as soon as it happens. Or stick around and we’ll take a look at some “back door” options in future posts.
Newshunt, which of course offers carrier-billing for its readers in India, has seen over 4 million ebooks downloaded in the past six months, and almost all paid for with carrier-billing.
Given the Indian ebook market is barely off the starting grid, and there is so much competition, that’s an impressive initial foray, and a sure sign of things to come.
Not to mention a sure sign of which companies are in the running down the road.
Microsoft, for instance, is planning on offering carrier-billing in India in the near future for its Windows phone app.
Looking beyond the region briefly, Microsoft also has carrier-billing arrangements in the Middle East, and Google Play just introduced carrier-billing in the United Arab Emirates. As we’ve said before, Google Play is the only likely candidate for an easy-access western-retailer-operated Middle East ebook store. (LINK) Hopefully we’ll see that in 2015.
Rockstand too offers carrier-billing. More on both Newshunt and Rockstand below.
Amazon? Amazon famously keeps all its payments in-house, and while there’s little hope Amazon will offer carrier-billing in India any time soon, there are indications that the Amazon wall is, if not quite crumbling, then having a few gates reluctantly put in.
Offering carrier-billing for the Fire phone was unavoidable, of course, but lately Amazon has been very quietly signing up to a carrier-billing scheme in Germany of all places.
Amazon has joined with Bango and Deutschland Telefonica’s O2 mobile network to allow German buyers to pay for Amazon apps through their phone bill instead of paying Amazon direct. (LINK)
In fact Amazon initiated this over three years ago, but only now has taken the plunge, slowly facing up to the reality that carrier-billing is the only way the company can hope to maintain, let alone grow, market share in overseas markets.
The cost to Amazon is of course two-fold. First, revenue sharing with another party (but don’t worry, they’ll just tighten the screws on the content-providers all the more to make that up), and second because they won’t have the customer data. For these reasons carrier-billing will always be a last resort.
Across Europe, according to Jupiter Research, there are some 280 million adults who have no debit or credit card to pay on-line. (LINK) This is by no means just a Third World problem.
Amazon will have no choice soon but to look at carrier-billing in India, Brazil and Mexico, but at this stage it doesn’t appear to be on the agenda, leaving an open goal for Google Play among the western ebook retailers.
For the record, there are no Apple, ‘txtr or Nook ebook stores in India.
Kobo is there via W H Smith India (not that we indies are invited, so forget that) and Crossword (but only as a link to the Kobo localized store).
OverDrive are represented via Landmark (also the country’s biggest b&m book chain) and Infibeam.
Other options include Magzter and Pothi, and the aforementioned Flipkart, Newshunt and Rockstand, as well as a growing number of niche players.
We identified Newshunt and Rockstand above as ones to watch, so let’s end on those.
Newshunt is a mobile-only ebooks store that is run by Ver Se.
Newshunt has seen 50 million app installations, has 14 million active monthly users and gets over 1.5 billion monthly page views. More importantly it expects to have 200 million active monthly users within two years, as m-commerce takes off in India. (LINK)
Given India is expected to have 385 million smartphone users by 2017 (more than one for every man, woman, child and baby in the US) that kind of growth is probably conservative.
Make no mistake, India is a place all indie authors should have their focus on. And none should close their eyes to what a deal with a local publisher could bring to the table in terms of access and translation to India’s local languages (both Newshunt and Rockstand specialize in offering ebooks in multiple Indian languages).
As well as carrier-billing Newshunt also allows customers in India to pay using its proprietary payment option iPayy. No, nothing to do with Apple, because that’s not a typo.
What is it is one more way in which local ebook retailers on the subcontinent have the edge over the western giants trying to barge their way in, and one more reason why western indie authors wanting to share in the action need to look beyond the convenience of their home-grown distribution options.
Rockstand is owned by Handygo Technologies, and needless to say it offers carrier-billing – via three Indian telcos: Airtel, Vodafone India and Idea Cellular.
As with Newshunt, getting in isn’t easy for indies.
In March Rockstand signed a deal with Ingram for ebook content, but of course only a handful of indies are in the Ingram ebook catalogue in the first place. (LINK) We’ve thus far been unable to determine if indie titles in Ingram are actually available among the 2 million ebook titles on Rockstand, but there’s no reason to suppose they are not.
We’ve said before and will say again, India, Indonesia and China are the most exciting prospects on the planet right now for indie authors willing to step outside their comfort zone.
The global ebook market is going to dwarf the US market many, many times over as it blossoms, and those who get an early foot in the door will have best chance to reap the rewards.
No, there will be no instant successes and no instant rewards.
But think about how hard it is now for new authors to gain traction in the US and UK markets. And how much harder it’s getting, by the day.
The nascent global markets aren’t quite open goals, but there are myriad opportunities for savvy authors to become big fish in small ponds overseas. And then to grow to be even bigger fish as the pond gets bigger.
No, it won’t be easy. Yes, it will take time, effort and probably some costs if you really want to make an impact.
So start small. Focus on one country – say, India – and get things in place, and then move on to the next. Build a readership base and then move your focus to the next country.
No-one can do it all at once. Don’t try.
But don’t take the path of least resistance. Amazon is a great starting point for India, but for all the reasons above it is not going to give you much reach in that country, and none at all across much of the globe.
Amazon can play a key role in your path to becoming a truly global bestselling author, but it won’t do it on its own. Period.
Think about the next five years, not the next five weeks.