Why Amazon Reiterated Its Commitment to India
$5 billion investment in India
During its 2Q17 earnings call, Amazon (AMZN) reiterated its commitment to continue investing in India (INDA). For example, the company talked about introducing its Alexa and Echo smart speaker products in the Indian market. Amazon plans to invest $5 billion to grow its Indian operations.
The company’s recent investments in India have included building warehouses, marketing, increasing its product assortment, and other activities aimed at sharpening its competitive edge in the market.
Amazon’s main competitor in India’s e-commerce industry is Flipkart, which counts eBay (EBAY) and Microsoft (MSFT) among its investors. Alibaba (BABA) also has an interest in India’s e-commerce industry and is backing Paytm, a smaller Amazon rival.
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Amazon growing faster than the market
Looking at the recent progress report of Amazon India, it becomes clear why Amazon reiterated its commitment to invest $5 billion in India.
Amazon India registered gross merchandise sales growth of 59% in 2Q17. In terms of unit sales, Amazon India said its gross merchandise volume increased 88%. Comparing these figures with the industry average metrics shows that Amazon India is growing faster than the overall Indian e-commerce market.
According to the Economic Times newspaper citing data from RedSeer Consulting, India’s e-commerce industry registered a 20% increase in gross sales by value and a 16% increase in gross sales by volume in 2Q17.
Taking market share from competitors
For Amazon to grow sales at the above-industry-average rate, it implies that the company is taking market share from the competition. If that is the case, Amazon appears to be taking advantage of troubles facing its other India competitor, Snapdeal.