Amazon bets on Diwali to take India lead
bengaluru — When Jeff Bezos donned a bandhgala jacket two years ago and posed for photographs in India, he wasn’t just promoting Amazon.com’s year-old business in the country. The web retailer’s CEO was also putting his reputation on the line to break into the emerging e-commerce market.
Now, with 80 million products for sale, 120,000-plus merchants and more than two dozen warehouses, Bezos’ protege Amit Agarwal is aiming to make Amazon the country’s top online store by sales ahead of the Diwali shopping season. The run-up to the celebration is India’s biggest retail event. Indians will spend $1.7 billion online during Diwali this year, according to RedSeer Consulting.
Flipkart, India’s top web retailer, and local rival Snapdeal, are well aware that they’re facing a critical test this year amid Amazon’s onslaught. All three are flooding newspapers, billboards and TV shows with ads and are offering discounts for Diwali, which now makes up a third of annual e-commerce sales. At stake is the future of India’s online shopping market, as well as Amazon’s global expansion plans, which had faltered after it failed to conquer China.
“This season could decide who’ll be the ultimate winner,” said Haresh Chawla, a partner at private equity firm India Value Fund Advisors.
Reaching consumers in India has never been easy — just ask Unilever or Procter & Gamble, which spent decades making inroads into the market. There are 22 languages, and consumption habits differ from place to place. There are supply chain inefficiencies, high real estate costs, lack of skilled workers, along with poor infrastructure. Even so, the prospect of becoming the main web store in a country of 1.25 billion people who are just learning how to shop online is tantalising. RedSeer Consultancy estimates that annual online sales will be $80 billion to $100 billion by 2020 from the current estimate of about $13 billion.
Merrill Lynch estimates that Amazon may sell $81 billion in merchandise by 2025, up from $3.7 billion last year. Becoming India’s top web retailer would be a vindication for Amazon. In China, the only other market with more than a billion people, the company has little to show after a dozen years, thanks to the dominance of Alibaba Group Holding and other local web retailers.
“The biggest opportunity and the biggest challenges are both in India,” said Agarwal, chief of Amazon India. “It’s going to be a great Diwali.”