SUMMARY
Investment bank RBC Capital Market attributed this to rising smartphone adoption
India is expected to generate $32 Bn in revenue by 2023
Amazon has so far spent $5.5 Bn on its India operations
According to an RBC Capital Market report, India is expected to account for 13% of Amazon’s international sales and 4% of overall sales by 2023. Sales in India are expected to generate a total of $32 Bn by 2023, which would give Amazon India a market share of 35% in Indian ecommerce.
“India’s ecommerce sales are expected to be the second-fastest growing among the top 10 APAC countries, at 26% three-year annual growth, thanks in part to its low (5%) ecommerce penetration, which compares to 24% in China and 9% in Japan, ”RBC Capital reportedly added.
The report attributed the growth in sales to the rising rate of smartphone adoption, growing middle class population, young demographic and growth in penetration of ecommerce companies such as Amazon and Flipkart.
As of April 2018, Amazon India had 67 fulfilment centres across 13 Indian states. On top of it, the company’s processing units are said to be spread across 19 Indian states and employs thousands of people, a testimony to the company’s vast delivery network across India.
Amazon has reported a 17% growth in net sales reaching $59.7 Bn in the first quarter of FY19, compared with $51 Bn in first quarter 2018. The company’s operating income increased to $4.4 Bn in theQ1 2019, compared with operating income of $1.9 Bn in Q1 2018.
Amazon’s Growing Focus On India
The ecommerce giant has been trying to get Indians on board by constantly localising products and features. Amazon has so far spent $5.5 Bn on its India operation, including $500 Mn on food retail. It set up a new 9.5-acre campus, its largest facility globally, in Hyderabad for 15K employees in India.
Last week, Amazon India head Amit Agarwal said that Amazon will continue investing towards its long-term goals in India instead of getting distracted by the short term situation such as the current economic slowdown in the country.
Earlier this month, Amazon forayed into the offline-to-online commerce space with the acquisition of a 49% stake in Kishore Biyani’s Future Coupons, the promoter entity of India’s second-largest retail chain Future Retail.
Commenting on the investment, Future Group’s founder Kishore Biyani said this investment in the firm is not just to raise money but also to become a part of the ecosystem. “This deal is aimed at enhancing the payments portfolio of both companies,” he added.
Another notable development this week was the launch of Amazon’s grocery delivery vertical, Amazon Fresh in India, under Prime Now. Amazon Fresh was first launched in Seattle in 2007 and has been the flagship food and grocery delivery offering of Amazon globally.
Amazon has also been reported to be eyeing a foray in the food delivery market of India. The ecommerce major is said to be in talks with Ola’s Foodpanda to start this service.
