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India bet is paying off big time: Amazon's Jeff Bezos tells investors

Prime loyalty programme saw its fastest growth in India compared to any of the other geographies where the company has taken it

Alnoor Peermohamed  |  Bengaluru 

Jeff Bezos
File photo of Jeff Bezos (Photo: Reuters)

As India becomes an increasingly important market for US online retail giant Amazon, founder and CEO in a letter to investors on Wednesday assured them that the billions of dollars the company was investing into the country was producing results.

In the letter, Bezos claimed that was the fastest growing marketplace in the country and its website was the most visited site on desktops as well as mobile devices, citing comScore and SimilarWeb. He also said that the Amazon app was the most downloaded shopping app in India in 2017, according to App Annie.

Moreover, the Prime loyalty programme, which Amazon launched in the country in mid-2016, saw its fastest growth in India compared to any of the other geographies where the company has taken it. The programme which is targeted at increasing stickiness among consumers is one of its biggest investments in India.

“Prime added more members in India in its first year than any previous geography in Amazon’s history. Prime selection in India now includes more than 40 million local products from third-party sellers, and Prime Video is investing in India original video content in a big way,” Bezos wrote.

Bezos’ comments on India come at a time when Amazon’s biggest US rival is in talks to pick up as much as 55% stake in The deal could make it far harder for Amazon to dominate the Indian e-commerce landscape, putting in jeopardy the billions of dollars that it has already invested in the country.

Amazon has so far committed to investing $5 billion in India, but Bezos and his team have time and again reiterated that they will not hold themselves back to that number if more investments are required. In 2017 alone, Amazon pumped in a grand total of $1 billion into its India units, a big increase over its investments in previous years.

While the company has made similar claims of being the fastest growing e-commerce player in India citing reports and data from comScore, it continues to lag local rival in terms of the gross merchandise value sold, according to independent analysts. The Indian firm continues to have an edge over Amazon, especially in fashion and electronics.

However, with millions of Indian customers signing up for Prime - five million users by an analyst’s estimates at the end of 2017 - Amazon could lock enough of the country’s top spending shoppers to overtake in the long run. With video, music and services such as Alexa, Amazon is hoping to lure in high-spending users and to get others to shop not just once, but several times on its platform in a year.

In the US, analysts estimate that half of all households have a Prime subscription and the average spending by a Prime member annually is $1,200. This is twice as much as what a non-Prime user spends on Amazon, proving that the lock-in model was working wonders for the e-commerce giant.

Despite all this, Flipkart has proven to be far more resilient than Amazon might have liked it to be. While the US giant had closed the big gap between it and Flipkart in 2016, a massive $4 billion investment in the following year from the likes of Tencent and Softbank, ensured that the Indian company continues to stay ahead of it.

Experts say that if the Flipkart-deal goes through, Amazon will not only have to fight against far more spending by the Indian firm, but will also face Walmart’s prowess in sourcing, shipping and overall business efficiency. However, insiders say Bezos is committed to winning India no matter how big the challenge.

First Published: Thu, April 19 2018. 21:59 IST