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Amazon In India: Establishing A Leadership Position

21 March 2016

From Seeking Alpha:

Amazon Inc. has seen tremendous success in its Indian business. Amazon launched its Indian arm in June 2013 and has seen tremendous growth since then. India has become Amazon’s biggest source of new customers after the US. The Indian e-commerce market size is expected to reach ~$100 billion by 2020 and Amazon has successfully carved a leading position in the Indian marketplace. Its excellent customer service provides a strong reason for customers to prefer Amazon over other competitors (Snapdeal and Flipkart). India is set to be a major growth driver for the company, even as the US and UK markets mature for the company’s e-commerce segment. During fourth quarter 2015, Amazon sold more than it did during full year 2014.

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Why is Amazon bullish on India?

1) The average Indian spend is increasing – With the advent of smartphones in India, an average Indian is spending more online. According to a study, the average spend by an Indian shopper will rise 67% reaching Rs.10000 in 2015. It is expected there will be 40 million online shoppers in India by 2016, which will be double from what it was in 2013. India’s Diwali festival is somewhat like Christmas in the west when customers splurge on shopping. In India during the festive season, e-commerce firms in India like Amazon, Flipkart and Snapdeal roll out exciting offers to attract shoppers to the online medium. It is expected that about one-fourth of their revenue comes during this period.

2) Amazon is doing things differently – With a number of e-commerce sellers in the online marketplace, Amazon has been doing things differently to stand out. While most online sellers are using pricing and discounting as their main differentiators, Amazon is bringing in its global expertise and experience to climb to the top. Amazon started next-morning delivery for late-night orders. Amazon’s customer service and its website navigation also is much better than the main Indian competitors such as Flipkart and Snapdeal. Though Amazon is not doing anything radically different, but it’s doing things differently which may help it win the race. The company also is looking at exporting some of its innovations that it has developed in India to other geographies as well.

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6) Beating Competition – The early leaders in the Indian e-commerce business like eBay, Alibaba and Rediff are now trying to survive. Foreign e-commerce players have struggled in the Indian marketplace due to unique Indian issues. Indians mostly prefer to pay cash on delivery (“COD”) rather than through credit cards. Logistics also is a major challenge due the country’s under developed infrastructure. Amazon has been the only foreign company to adapt successfully to the Indian conditions, apart from Flipkart and Snapdeal. Even I have found Amazon to be much more reliable and trustworthy in delivering products, compared to other online players.

Link to the rest at Seeking Alpha