- Amazon.com Inc AMZN lagged behind its chief rival Walmart Inc WMT owned Flipkart in India on several key metrics and struggled to make inroads in smaller Indian cities and towns, TechCrunch reports quoting Sanford C. Bernstein.
- Amazon's 2021 gross merchandise value in the country, where it has deployed over $6.5 billion, stood between $18 billion to $20 billion, lagging Flipkart's $23 billion, the analysts said.
- India is a key overseas market for Amazon. It competes with Mukesh Ambani's Reliance Retail, Flipkart, and social commerce startups SoftBank Corp SFTBY backed Meesho and Tiger Global-backed DealShare.
- Amazon has so far offered "a weaker proposition in 'new' commerce" in the country, the analysts added.
- Reliance Retail launched grocery shopping on Meta Platforms Inc META WhatsApp.
- India's e-commerce spending will likely double to over $130 billion by 2025.
- Amazon's recent spending for growth in India has also made its local division's prospects of turning a profit "elusive," Bernstein added.
- Amazon has struggled to scale volumes in higher-margin categories like fashion and BPC (beauty and personal care). At the same time, the inability to operate a 1P model (inventory-led) has limited the availability of private labels vs. competition, which further pressures margins.
- Amazon's management attrition has also increased recently, potentially signaling difficulties achieving the desired scale," said Bernstein.
- India forbids a single seller from holding more than a 25% share on a foreign-owned online marketplace.
- Further, no e-commerce marketplace platform can mandate a seller/brand to sell exclusively on the forum, the analysts added.
- India has also clamped down on deep discounts.
- Additionally, the Indian central bank's proposed policy could impact Amazon's buy now, pay later offer, Bernstein, noted.
- Price Action: AMZN shares traded higher by 1.09% at $130.13 on the last check Wednesday.
- Photo via Wikimedia Commons
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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