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How Amazon’s India Music Launch Could Help Its Retail Business

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Dec. 4 2020, Updated 10:43 a.m. ET

Prime membership costs ~$15 per year in India

Amazon (AMZN) has joined Apple, Spotify (SPOT), and a host of other providers in India’s on-demand music arena with the launch of its Amazon Prime Music platform in the market. The launch of Amazon’s music streaming service in India coincided with Tencent’s (TCEHY) fundraising for India-based music streaming service provider Gaana. Tencent, which also backs Amazon’s India e-commerce rival Flipkart, led a $115 million funding round for Gaana.

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In India, Amazon Prime Music is available at no extra cost to members of Amazon’s Prime loyalty program. Prime membership costs $99 per year in the United States and ~$15.30 per year in India. In addition to video and audio entertainment, Prime membership carries benefits such as the free delivery of items purchased on Amazon’s retail platform.

$200 billion in India’s online retail industry

Prime members typically spend significantly more on Amazon shopping than regular shoppers. As such, Prime is viewed as a tool Amazon uses to build a loyal base of retail customers. In this context, the launch of Amazon Prime Music in India can be viewed as fitting in with Amazon’s efforts to draw more Indian consumers to its e-commerce platform. Amazon is investing $5.0 billion in building its business in India.

According to Morgan Stanley, the online retail market in India will be worth more than $200 billion in sales by 2026. India’s online retail sales were estimated to be $15 billion in 2016.

Stiff competition

While the revenue opportunity in India’s e-commerce industry is huge, Amazon faces a sea of competitors in the market, raising the need for it to sweeten its offerings to draw more customers. 

Notable Amazon competitors in India’s e-commerce industry include BigBasket, Snapdeal, and Flipkart. BigBasket recently raised $300 million in funding from investors including Alibaba (BABA). Snapdeal is also backed by Alibaba, which invested $500 million in the business in 2015. Flipkart is backed by eBay (EBAY), Tencent, and Microsoft (MSFT).

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