Amazon views quick commerce as a long-term test of operational efficiency at scale
Customer retention in a price-sensitive market is built on four pillars: assortment, quality, savings, and an end-to-end friction-free experience
Sree Ram stresses that there is no single silver bullet or shortcut; relentless execution of fundamentals forms the true moat in this segment
No Silver Bullet: Amazon Bets on AI, Operational Excellence and a 20-Year Horizon in Quick Commerce
In a price-sensitive market flooded with multiple quick-delivery options, how do you build lasting customer loyalty? Amazon’s Srikant Sree Ram argues that the answer requires looking far beyond deep discounts
Srikant Sree Ram, Director, Amazon Fresh
Summary
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While much of the quick-commerce conversation revolves around delivery speeds and cash burn, Srikant Sree Ram, Director, Amazon Fresh argues that the real story lies behind the scenes. He states that for Amazon, quick commerce is not a race to deliver products in minutes, it is instead a test of operational efficiency at scale.
In a conversation with Outlook Business on the sidelines of Amazon's 'Farm to Fork' event, Sree Ram explains how artificial intelligence and machine learning power everything from demand forecasting and inventory management to packaging decisions and conversational shopping. He discusses Amazon’s distinct grocery and quick-commerce strategy, the role of micro-fulfilment centres and why customer loyalty in a price-sensitive market depends on much more than low prices. Sree Ram also shares his perspective on what creates a sustainable moat in quick commerce and why profitability in the segment should be measured over years, not quarters.
End-to-end, from sourcing to final delivery, what does your tech stack look like and how does it improve operations?
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Amazon has used machine learning and AI for years. In grocery, it is especially important for forecasting because demand changes quickly and manual forecasting is difficult. We use customer demand patterns, buying behaviour and SKU availability to predict what to stock, how much to order and where to place inventory.
AI also helps decide packaging. When an order comes in, the system selects the right box or mailer based on the number of items, distance, other orders going to the same area and other delivery constraints.
Are you also using AI on the customer-facing side?
Yes. Generative AI is used in conversational shopping through Rufus, which helps customers discover products and make buying decisions. If someone asks for a phone within a certain budget and with specific features, it can recommend products.
It can also direct customers to Fresh or Now depending on availability.
What other areas are you investing in with ML and AI?
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Seller listings are a major area. Sellers can use generative AI to create catalogue pages more easily. For example, they can upload an image of a product and the system can generate details such as dimensions, colour and specifications for the listing. AI is also being used in advertising, where sellers can generate images and video creatives more easily.
Amazon specifically uses the term "micro-fulfilment centre" (MFC) rather than "dark store." My understanding is that the fundamental difference between the two lies in the level of automation involved. From Amazon's perspective, is an MFC essentially an automated version of a dark store, or is the distinction primarily a matter of terminology? How does Amazon define the difference between the two?
Not exactly. For Amazon, it is more than terminology. We call it a fulfilment centre because it is the place from which an order is fulfilled. We have large fulfilment centres outside cities, smaller same-day centres within cities, Fresh fulfilment centres for 2-hour grocery delivery and now micro-fulfilment centres.
These MFCs are smaller, hyperlocal and typically around 3,000 to 5,000 square feet, compared with roughly 9,000 square feet for a Fresh fulfilment centre. They serve customers within about a 2-kilometre radius.
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How are you solving customer acquisition in quick commerce?
We already have a large customer base in India through the marketplace, Prime, Amazon Pay, Prime Video and other services. So we are not starting from zero. The focus is on bringing existing customers into grocery, pharmacy and other services more frequently, and making Amazon a place where they find everything they need.
But, India is an extremely price-sensitive market. Many customers are willing to switch platforms for minimal savings. How does Amazon navigate this challenge? What strategies do you use to build customer loyalty and retention beyond pricing alone?
We focus on four things: assortment, quality, savings and end-to-end experience. First, we keep improving selection across the marketplace, Fresh and Now. Second, we focus on quality, especially for fruits, vegetables and perishables. Third, we help customers save through marketplace pricing, cashback and card benefits. Grocery is a frequent and significant spend, so savings matter a lot. Fourth, we make the experience friction-free, from search and checkout to delivery, so customers feel the shopping journey is smooth.
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What do you think is the moat in quick commerce?
There is no single silver bullet in quick commerce. It is an operationally intensive business that requires continuous improvement every day. Success does not come from a few products, aggressive pricing on select items, or any one strategy. The real moat is consistently getting the fundamentals right— assortment, quality, savings and customer experience and improving them over time.
The goal is to ensure that every time a customer returns to the platform, their experience is better than the last time. Over the long run, operational excellence and relentless execution are what create a sustainable advantage.
What do you think is the path to profitability in this segment? And how long would it take for a company or a segment like Amazon Now or Amazon Fresh to become profitable?
If you look at Amazon’s history, Amazon started in 1995 in the US and was listed as a public company in 1997. I believe the first year we achieved profitability was 2003. That was about 8–9 years after we launched and 5–6 years after we became a public company. So, I think it is well understood that everyone in this space is here for the long haul, and Amazon certainly is.
We came to India in 2013, and I was fortunate to be part of the launch team. One of the first things our India leader at the time, Amit Agarwal, who is now the Head of Emerging Markets and Seller Partner Services, said was that we were not here for the next three years; we are here for the next 20 years.
That long-term mindset continues to guide us. We will keep doing things that make sense for customers and improve their lives, and we believe that will ultimately lead to the right outcomes for both customers and the business.
We are not working against a calendar that says we must reach a certain milestone in the next three months or the next 12 months. Of course, there will be targets around profitability and revenue, but our perspective is measured in years. We have already been here for many years, and we intend to be here for many more.