Daily Management Review

Amazon to tap e-commerce market in India


US-based e-commerce giant Amazon Inc is narrowing down on India as its next potential market with limited success in China, the world’s most populous country.

With more than a decade of trials and tribulations to expand footprint in China, the company is now looking to list a variety of products for sale on a competitor’s site in China - Alibaba’s Tmall shopping marketplace. This also looks like an acknowledgement of defeat for the company to partner with Alibaba, its fierce competitor and the most dominant player in the Chinese e-commerce market.

But a recent news on Amazon planning to invest Rs 1,155 crore to build its presence in India shows that the company is focusing on the second most populous country in the world instead. The company also raised Rs 610 crore before booking the office space in Bengaluru, the outsourcing capital of India. Amazon’s CEO Jeff Bezos had also been vocal about considering India as the next big marketplace for the company.

The Indian e-commerce market is about five to 10 years behind China in market maturity but growing very quickly. Two local companies, Snapdeal and Flipkart have risen to dominance over the last five years. But the market shares are skewed and neither of the companies could project itself as the forerunner unlike the presence of Alibaba in China. This could also be a reason for Amazon’s move to India.

Amazon India, which launched in 2013, is pumping in $2 billion in its e-market for the country. Bezos nominated Amit Agarwal to run the India business.

Last year, Amazon launched over two dozen new stores on its portal to increase its selection for its consumers to more than 19 million products with a seller base of more than 16,000 vendors. Flipkart, in comparison announced it sells 20 million products, and gets 10 million visitors daily, in its eight years of existence. Amazon meanwhile is also concentrating on the clothing section of its e-market by introducing India-specific sellers in the site.