New Delhi, Aug 30 : Nearly a decade after Amazon India’s report card is mixed, foreign brokerage Bernstein stated in the report.India is frequently the of many.
It is the most sought-after market of many of the world’s internet giants but it is it is also one of the most difficult markets to access -you can check with Chinese apps.
“Who would not remember Jeff Bezos’ 2014 visit sitting on the top of an attractive lorry to announce an investment of $2 billion? However, nearly 10 years later, Amazon India’s performance is uneven,” the report stated.
It is among of Amazon’s largest overseas markets , and one of its fastest-growing with the best customer service and a huge Amazon Prime customers.
However, this expansion has been at a cost of more than $6.5 billion, and that’s not including the amount invested and profitability is still difficult to achieve (-5-10 percent EBITDA margins) The report stated.
It also is facing a lot of competition in areas that are growing rapidly as well as an unsatisfactory value proposition in “New” commerce as well as a weak market share in cities that are tier 2/3 and a hostile regulatory environment for foreigners, it said.
India is among of the few large and poorly reached market for e-commerce with sales of just 5 percent far lower than the average for global markets (14 per cent).).
eCom spending is predicted to increase by 2x to $130 billionor more in GMV until 2025 with consumers who shop online expected to increase by 2x , reaching 300 million.The growth will be driven by the new generation of online buyers, primarily from cities in the 2/3 tier and the continued migration of online shoppers of important categories, such as clothing and groceries.
“Within grocery we’re already seeing an evolution from slow e-Commerce to fast/instant delivery.In the world of fashion, social commerce as well as D2C brands are increasing market share,” the report said.
Even though India is a market with three players with three players – Amazon, Walmart/Flipkart and Reliance’s JioMart The market is very fragmented with significant market differences based on market category, tier, as well as distribution models.Amazon is the leader in core categories (consumer electronics and media) and has performed quite well in cities in tier 1 with five million prime subs as the report stated.
Reliance is leading in the categories of eGrocery/O2O with 15,000 retail stores and a more robust 1P model.Flipkart is still the leader in the category of apparel with two times the size of the closest competitor.
However, more recent players like the Softbank-funded Meesho ($5 billion GMV) are gaining ground in the fastest-growing cities of tier 2/3, in which Amazon has had a difficult time gaining popularity due to its low prices and zero commissions.
Regulations don’t allow an inventory led or 1P model for foreign entities like Amazon.
Amazon has invested in Shoppers Stop (fashion), More (grocery) and a an rumored stake in Ecom Express (logistics) but integration has been restricted because the regulations don’t permit complete control, according to the report.
The key competitor Reliance has increased its e-Commerce operations (~19 percent of its core retail sales) using its large presence of stores (15,000) and an inventory driven model.
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