India often a crucible, an idea generator: Amazon's Russ Grandinetti

Amazon sees India not just as a fast-growing market but a launchpad for global innovation, as it ramps up investment, accelerates quick commerce, and deepens its AI-led expansion

Global tech giant Amazon sees India as a testing ground for several global innovations, building and testing capabilities initially in the country before rolling out to other global markets like Europe, Japan, Brazil, and the US, said Russ Grandinetti, Senior Vice President of International Stores. In a conversation with Udisha Srivastav and Nivedita Mookerji, on the sidelines of Smbhav, the company’s annual summit for MSMEs, Grandinetti also spoke about the company's quick commerce push, geopolitical considerations, choice of data centre locations, and the path to profitability. Edited excerpts...

 

Amazon has just announced its plan to invest $35 billion in India with artificial intelligence (AI) being a focus area. This comes a day after Microsoft’s $17.5 billion commitment. Why is India so relevant for MNCs?

 

India is the most populous country in the world. It's not too far away from a time when it will be the third-largest economy. These things alone would be enough to justify the focus and interest in building our business here because the local market and opportunity are very large. There is a passionate vision for Viksit India, which means a lot of investment and change, but also opportunity. At a second level, there are so many things we often build here first, and then bring to other parts of the world. So, India is often a crucible, an idea generator in which we first build a capability, and then Amazon customers in Europe, Japan, Brazil, and the United States benefit from things we might build here first.

 

Is the $35 billion investment the biggest in Asia? Could you up it even more if required? 

It's certainly among our largest investments. We have a very big business in Japan, so I don't know how it compares, but our investment in India is on the short list of our largest investment countries. We've invested $40 billion to date in India, and now we're investing another $35 billion on top of that. The AWS investment ($12.7 billion), announced recently, is a subset of the $35 billion announcement. 

Naturally, we're prepared to invest to meet the opportunity. It wouldn't surprise me if the opportunity in some places grows even faster than we currently predict. So, of course, there is the potential.

 

One of the innovations you tried in India first was quick commerce. How is it going?

 

We are now opening two micro fulfillment centers a day, and we've ramped very quickly in the three cities we currently operate in. We're very pleased with the customer reception of the business. An encouraging thing is that we also have this larger Amazon e-commerce business, and that customers who use Amazon Now are also shopping at the core store more frequently than before. It has a nice sympathetic effect, and it helps the whole be larger. 

 

Will the quick commerce bubble burst? 

 

I can't speak for any other companies. I think the fact that our quick commerce service is part of the larger business makes us very confident, and it's a sustainable service.

 

Your investment has come at a time when India is in a difficult geopolitical situation. Does that influence how investments are made in a particular geography?

 

I wouldn't say so. We're very focused on long-term investments for something we expect to build over many years. It's always been true that there are macroeconomic headwinds and tailwinds to our business in different places. I think it's important to be mindful of those, but also to focus on things we know and can control. Occasionally, there can be more or less complexity to sell to one part of the world than another, but because we bring the whole world to an Indian seller, that's a very robust opportunity. Also, every country has its regulations, economic policies, and things that can shift from time to time.

 

You announced data center plans in Maharashtra and Telangana. How do you decide which state to go to?

 

The first thing is where the customers are and where the demand is. It's a lot like the choices we make about fulfillment centers, which is how close or far  you are from customers, where you can find land that's the right combination of low cost but also allows for a good service level. So, the same considerations would apply there.

 

How does the road to profitability look?

 

Amazon has many businesses in India, each at a different stage of maturity and evolution. We will continue to have a portfolio, some portions of which have reached profitability and are sustainable, and some portions are still very much investments. So, just by way of example, there might be a more mature part of the e-commerce business that reaches profitability before the quick commerce part. We tend to think about these things not as one whole, but look at each segment, and make investments relative to both their size and their opportunities. So, I feel very good about the sustainable business that we're building in India.