Why Is Amazon Bullish on India?



Fastest growing market

In June 2013, Amazon (AMZN) entered Indian markets. Currently, India is the firm’s fastest growing geography with respect to sales. Amazon has stated that it’s the biggest e-commerce company in India. It has a portfolio of over 25 million products. This is ~5 million more than leading domestic player Flipkart.

In June 2014, Flipkart raised funding of $1 billion after Amazon stated that it planned to invest $2 billion into Indian markets to fund and expand its operations. Amazon’s CFO, Brian Olsavsky, stated that “When we see a positive surprise we double-down on it – that’s kind of our policy – and India is that kind of surprise. We’re very happy, very encouraged early on about what we’ve seen so far with the ramping up of the business, the level of innovation going on for both customers and sellers.”

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Amazon to increase investment to $5 billion

Earlier this year, Amazon (AMZN) announced that it’s looking to increase its investments in India to $5 billion, according to a report in The Economic Times. This will make India Amazon’s biggest market outside the US. As you can see in the above chart, the e-commerce segment in India is expected to increase from $2.9 billion in 2013 to $100 billion in 2020.

Global player Alibaba (BABA) has increased its investments in India as well. It raised its stake in the e-commerce firm Paytm. The major players in the e-commerce segment in India include Flipkart, Snapdeal, and eBay (EBAY).

You can get diversified exposure to Amazon by investing in the First Trust ISE Cloud Computing Index Fund (SKYY) ETF and the PowerShares QQQ Trust Series 1 ETF (QQQ). They hold 3.55% and 4.87% of the stock.


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