uploads///Retail eCommerce Sales

Why India Is Important to Amazon

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Jun. 21 2016, Updated 11:04 a.m. ET

India offers huge growth potential to Amazon

India (EPI) is one of the fastest-growing economies in the world. The Indian e-commerce market is experiencing strong growth thanks to the country’s growing per-capita income, Internet penetration, and number of online shoppers.

Considering this huge growth potential, Amazon (AMZN) has mentioned that it will continue to invest heavily in India and that it has already increased its fulfillment capacity.

Amazon has also stepped up its investments, as competition is stiffening. Flipkart and Snapdeal are the leading local players in this market, while Paytm has also become aggressive. Alibaba (BABA) has invested in both Snapdeal and Paytm to tap into India’s e-commerce growth potential.

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Earlier this year, Amazon announced its acquisition of Emvantage, an Indian startup that provides a platform for making online payments using debit or credit cards and other mobile payment systems. Amazon will integrate its Indian web portal with the Emvantage payment gateway to facilitate users’ online transactions.

Amazon could face regulatory hurdles in India

Amazon expects India to be its largest market outside of the United States (SPY) and has even called India the next trillion-dollar market, according to a report from Fortune. According to eMarketer, India is expected to generate strong double-digit e-commerce sales growth.

Despite this strong growth potential, Amazon faces a few regulatory risks in India. According to new regulations, marketplaces in India won’t be allowed to garner more than 25% of their sales from one seller.

Another regulation states that these companies can’t influence product prices by offering deep discounts. These regulations will impact all e-commerce players in India, including Flipkart, Snapdeal, eBay (EBAY), and Amazon.

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