Name: Can Amazon Succeed In India?
Uploaded: 2019-09-08T10:52:32.000Z
Duration: 6 min 31 s
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The hype over the location of Amazon's HQ2 has died down, but the

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e-commerce giant actually just opened its biggest office building yet.

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million square feet of office space, making it the largest Amazon building

It has the capacity to hold some 15,000 workers.

Even its headquarters, individual buildings in its hometown of Seattle,

can't hold that many people in one building.

The building out of the new campus in India just is another sign of how

committed Amazon is to the market, how aggressively they plan to invest in

the market, how much of a commitment they're making to India.

India is seen as one of the last major growth markets for the retail

Amazon began its retail operations in India back in 2013.

Since then, the company has invested more than five billion dollars into

the country. Now, the reason that Amazon is so interested in this market

is because it represents enormous untapped potential.

Right now, e-commerce represents just 3 percent of total consumption in

While India's population has swelled to 1.3

The country recently rolled out its 4G network, and as Internet

penetration rates continue to climb, Amazon hopes to edge out local and

They're sinking a lot of money into India because the projections are

crazy. I mean, analysts say that this is a market that's going to be worth

However, Amazon faces steep competition from Walmart, which completed its

16 billion dollar acquisition of domestic e-commerce company Flipkart in

2018. Before the acquisition, Flipkart controlled an estimated 40 percent

of the Indian e-commerce market, bolstered by its fashion and apparel

brands. Now Amazon and Walmart are locked in a tight competition for

market share. Yet despite their growing influence, roughly 90 percent of

India's retail market is still controlled by small mom and pop stores.

These local retailers wield a lot of political power, which has led to

updated e-commerce regulations that make it much tougher for multinational

corporations to take on domestic competitors.

Direct to consumer sales were already banned for foreign-owned retailers,

leading Amazon and Walmart to set up a network of affiliate companies that

allowed them to continue selling their own products.

But after Walmart's Flipkart acquisition, the Indian government banned

foreign e-commerce companies from selling products through affiliates that

they owned a majority stake in and from negotiating exclusive deals with

Amazon has a lot of its own private label products like the Echo, like

batteries, like a lot of things, and groceries as well, that it's trying

So when the government put in regulations that said it wasn't able to even

sell its own products through merchants that it had a stake in, that led

Amazon to take down thousands of products on its website.

The New York Times estimated that Amazon would have to pull about 400,000

items in total, accounting for nearly a third of its sales in the country.

However, these regulations could only be a short term setback.

Some analysts say it's just a matter of time before Amazon finds clever

ways to reconfigure its business models and partnerships to comply.

Amazon is pouring a lot of money into the country.

Could that all be stifled by these regulations?

I think probably Amazon is going to figure out a way to work its way

There's a reasonable track record they have of executing well despite some

obstacles, whether they are economic or cultural or logistic or

Amazon is already taking major steps to adapt by expanding its brick and

In August, it signed a deal to buy a minority stake in Future Retail,

which operates over 900 stores and owns several large supermarket brands.

With this investment, Amazon is really taking this hybrid retail approach.

By combining the brick and mortar, the localization of an Indian partner

and its own e-commerce experience, that's what Amazon believes will

hopefully lead it to success in this market.

The company is also expanding its online grocery business, AmazonFresh.

Now, grocery deliveries will be available in some parts of Bengaluru and

Food and grocery is by far the largest retail segment in India.

It's almost 55 or 60 percent of household spends is still grocery items.

So, you know, without that, it's very difficult for Amazon to capture the

Amazon also hopes to learn from past mistakes.

The company shut down its e-commerce operations in China this summer after

They faced really good entrenched competition from companies that did a

much better job fitting their products and their services to that market.

In India, it's taking a different strategy.

There's more of an emphasis on rural customers.

In fact, 80 percent of Amazon's customers currently in India live outside

Amazon has actually set up these sort of really tiny stores in rural areas

so that Indian customers can go in and actually learn how to purchase

things and order things on their smartphones.

Now, Amazon even offers an alternate version of its app designed to run on

inexpensive smartphones with spotty Internet access.

It also launched its Hindi website last year and hopes to add a variety of

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Can Amazon Succeed In India?

eventually

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