Is Amazon.com, Inc. (NASDAQ:AMZN)’s Decision To Invest In India Paying Off?

Is Amazon.com, Inc. (NASDAQ:AMZN)’s Decision To Invest In India Paying Off?

0
526
FedEx (NYSE:FDX) Competition for Amazon (NASDAQ:AMZN)

Amazon.com, Inc. (NASDAQ:AMZN) is expanding its presence by investing about $5 billion in India in the next few years. The objective is to take advantage of the growing culture of shopping through online in the subcontinent. eMarketer sees digital buyers growing at a pace of 82.7 percent to 329.1 million buyers by the year 2020 compared to an estimated 180.1 million this year.

Amazon’s focus on India assumes significance as the company could expand at a rapid pace than the domestic rival, Flipkart. This is because India is a growing economy and the government is encouraging digital sales or digital transaction vigorously. This should also suit the company’s interest rather than spending more time and energy on China where it has to fend off Alibaba Group Holding Ltd (NYSE:BABA)’s advances.

Incidentally, the Chinese e-commerce company is also gaining traction in India with its investments in Paytm, a digital payments processor and ecommerce platform. The Chinese firm is also keen to enter the Indian market directly later this year.

Amazon does not want to leave behind and wants to a front runner with its solid backing from the United States. eMarketer quoted Bank of America Merrill Lynch projection of Indian ecommerce market and the market share enjoyed by the American firm, domestic company and others.

Though Flipkart will continue to maintain its lead, Amazon will increase its ecommerce share from 28 percent in 2016 to 31 percent in 2017, 34 percent in 2018 and 37 percent in 2019. On the other hand, Flipkart, which had 43 percent last year, will maintain its share in the current year and increase it to 44 percent in 2018 and 2019.

Amazon has also been increasing its offerings in India. For instance, the company got a license for a digital wallet in late March. That removes the two-factor authentication for making online payments. Though there were heavy discounts being offered by ecommerce firms, this has been phased out increasingly of late.

Most recently, 7Park Data suggested that the American online firm is gaining traction among mobile shoppers in India. The company pointed out its customer engagement with mobile app jumped 46 percent whereas Flipkart’s fell 11.5 percent in the first quarter.

On Tuesday, the stock added 0.20 percent in regular trading session.