Amazon’s International Growth Slowed In Q3 Due To Late Diwali Sale

Global ecommerce company Amazon has announced its financial results for the quarter ending September 30, 2018, and has recorded net sales of $56.6 Bn, a growth of 29% Q-o-Q.

In the list of positives for the quarter, Amazon had an operating income of $3.7 Bn, Net income increased to $2.9 Bn among other details. At the same time, the growth in international business, which includes India, slowed down to 13%, compared to 27% in Q2 and 34% in Q1.

Amazon attributed this majorly to a later Diwali sale in India, compared to the previous year, but went on to control losses from the international business by 59% compared to $936 Mn losses in the previous year.

Amazon’s chief financial officer Brian Olsavsky said in an earnings call, “There was also a material change in the Diwali calendar in India. About half of Diwali sales were in Q3 last year, now it will be in Q4. That has hit international growth particularly.”

It is to be noted here that in this festive season, Amazon is said to have seen sales of $700-$800 Mn during the five days flagship sale, even though it was less than $1Bn GMV of its major competitor Flipkart.

According to Redseer consulting, Flipkart accounted for 51% market share, while Amazon stood at 32%, with the etailing industry raking in $2.3 Bn GMV.

Along the same lines, Amazon remains chirpy about the upcoming holiday season and sees a strong Q4 due to holiday sales in the US and other countries including India.

“Diwali moved to Q4, and it’s going very well. We have had 60% growth in new customers during the period, orders coming from 99% postcodes. It was a great first wave of the Amazon Great Indian Festival,” the company said.

In its highlights for Q3, Amazon also noted the launch of its Hindi website in a bid to reach the next 100 Mn customers in India. The company did not specify how many new shoppers came on its Hindi website during the sales, but said that “new customers on our Hindi website grew by 2.4X over a normal business day.”

“We continue to invest in Prime benefits and international expansion,” the company said during the call.

The impact of India on Amazon’s global presence can also be noted from the update in risk factors for Amazon in June while taking cognizance of competition in global markets, soon after its US-based rival, Walmart announced that it plans to buy 77% stake in Flipkart.

Here’s a quick look into all that Amazon is doing in India:

• Amazon is all set to pick up a minority stake of 10% in the Kishore Biyani-owned Future Retail that owns the popular Indian hypermarket chain Big Bazaar, supermarket Easy Day and premium lifestyle food superstore Foodhall
• Amazon offered $400 Mn to Kolkata-headquartered Spencer’s Retail for 30% stake in the company
• In June 2018, Amazon invested $1.5 Mn (INR 10.5 Cr) in its Indian food retail arm, Amazon Retail India, which is also a vendor on Amazon’s Pantry and Prime Now grocery offerings
• Amazon India is looking to strengthen its logistics capabilities with geotagging and new-age technologies such as artificial intelligence (AI) and machine learning (ML)
• Amazon invested $79.8 Mn (INR 590 Cr) in its Indian digital payment arm Amazon Pay
• Amazon wants to start selling life, health, and general insurance in India and is looking to carry out the business of soliciting, procuring and servicing insurance as a corporate agent

As Amazon grows further and faster in the country, India’s impact on Amazon’s growth continues to be an interesting sight.