I will be surprised if Amazon can do more than maintain a token presence outside of major cities, but I am sure they have plans.
Payment is a massive pain in the ass though. Getting credit cards is a nightmare if you don't have a traditional job. You need 2-factor authentication for all transactions, which is just a ton of work.
I often end up using 'cash on delivery' just because I'm too lazy to enter my debit card details and do the 2-factor authentication
Flipkart still has a better presence outside of the big cities, but Amazon is catching up, fast.
Care to elaborate? Cash-on-delivery is a common payment method in Japan, and Amazon Japan and many other online marketplaces have been using it for years. It can be problematic operationally, but how is it worse than credit card settlement for the finance department?
Payment at the convenience store is another common method here, and it's arguably more problematic than COD as the marketplace/merchant has to wait for the payment to go thru before shipping.
While on one hand I was more than happy to get it in three days and a little cheaper, I also realized that this won't last forever. Amazon's capital has gotta run out at some point in time and the cheap/fast service will stop there.
They're famous for being willing to push competitors into the ground on margins, at whatever loss is necessary in the relative near-term. It's very likely they're going to seek to squeeze Flipkart on margins until they're struggling to operate due to a very high cash burn (with venture capitalists eventually unwilling to keep pouring red ink down the drain).
I'd bet that Amazon views India as a truly massive future market. They really can't crack China properly, and likely never will. India however, they can crack. They'll pour vast resources into it to build out a dominant position. If you told Amazon they can own a dominant position in India for the next 30 years by spending $10 billion today, they'd write that check immediately.
They're the world's largest retailer by market valuation, and carry $14.4 billion in cash (with the ability to raise whatever sum they need at any time they need it). Further, AWS has become a cash generating monster, that will fund any adventures Amazon wants to undertake over at least the next decade.
No chance they run out of capital.
EDIT: Also Indians still share in village so even if amazon says they will give only 10 Hamam soaps but at 10% less or 10 Horlicks with 15% less, people will pool and buy.
"do not care"
That's a solid point :-) and largely true, though a generalization. Changing some at least among the younger generation in cities, though.
In Germany for instance credit card ownership rates are fairly low, still Amazon is doing really well using direct debit.