Amazon’s growth in India has been steady since it launched here four years ago. The online retail giant grew its revenues by 105 percent in FY17. While regulatory filings of Amazon Seller Services (that include commissions from its parent, advertising fees, shipping fees, third-party transactions) showed a 41 percent revenue growth, Amazon India also earns from the sale of goods on its marketplace. If that is considered, yearly revenues increased by more than a 100 percent, according to reports.
“Comparing like to like, the Amazon Marketplace revenue in India grew by 105 percent for the year ending March 31, 2017. The annual returns filings [with the Registrar of Companies] include other line items,” an Amazon spokesperson was quoted as saying. It is believed that demonetization affected sales as most of the cash-on-delivery (COD) orders came to a halt. Close to 60 percent of all online shopping in India are still cash-based transactions. Further, as rivals like Paytm Mall started matching Amazon with deep discounts and attractive cash backs, its revenue growth was checked. If these factors didn’t exist, Amazon India sales would have soared even higher.
But a 100-plus percentage growth is no mean task. And Amazon’s sustained heavy investments in India operations bear testimony to the fact that this is a critical market for the Seattle-based firm. Amazon has committed over $5 billion to its India business, and rolled out all allied services and products from Amazon Prime and Amazon Pay to Amazon Echo in a year’s time. These are likely to be key growth drivers for Amazon India going ahead. Additionally, Amazon also infused Rs 2,900 crore into Amazon Seller Services earlier this year.
Amazon could “double down” on investments going ahead as it plans to take pole position in India’s e-commerce market that is currently led by Flipkart. While the gap is narrowing, Flipkart’s new investor SoftBank is aiming to give the homegrown etailer new direction in terms of strategy and expansion. Flipkart is flush with $4 billion in cash and is currently scouting for inorganic partnerships across the e-commerce spectrum. Then there’s also Paytm Mall, which has grown into a strong third alternative for online shoppers in India. Hence, Amazon India may not exactly want to rest on its laurels.