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Amazon optimistic about a stable ecommerce policy in India, says CFO

Company says this would help it continue investing in technology and infrastructure and create jobs

Peerzada Abrar  |  Bengaluru 

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on Friday said it is hopeful that India would have a stable and predictable e-commerce policy, and the online retailer was engaging with the government on this. This would allow the Seattle-headquartered company to continue investing in “technology and infrastructure” in the country, said Brian Olsavsky, senior vice president and chief financial officer of during an earnings call. “And it also helps us to create jobs and scale local businesses,” he added.

After the revised e-commerce policy was announced last December, had to face downtime in India owing to certain regulatory changes. The revised policy had barred e-commerce players from selling products through entities in which they own a stake. Vendors were also not allowed to have more than 25 per cent of their revenues coming from a single platform. The new rules, which came into effect from February 1, 2019, had also stopped online retailers from selling goods exclusively on e-commerce platforms.

Ankur Pahwa, partner and national leader, e-commerce and consumer internet at EY India, said there has been a long-pending ask from the industry to have a clear and predictable policy governing the e-commerce sector. “While the government is interacting with key players in the segment to take stakeholders view, it is yet to release a fully framed policy which creates uncertainty for global players who have placed big bets on the Indian market,” said Pahwa.

In the second quarter ended June 30, 2019, Amazon’s net sales increased 20 per cent to $63.4 billion when compared with the corresponding quarter last year. Its net income increased to $2.6 billion Q2 when compared with $2.5 billion it reported in the year-ago period.

Olsavsky said Amazon continues to see growth in programmes for its sellers and delivery partners in India. In the last 18 months, the company doubled the number of its paid Prime members, “which we're very excited about,” he said. The firm has also invested a lot in its ‘global selling programme’, which helps Indian sellers not only reach customers in India but also in other geographies around the world. In April this year, Amazon India had said that the company expects e-commerce exports from the country to reach $5 billion by 2023.

Olsavsky said, the ‘Amazon Flex’ programme launched in India in this June, provides opportunities for local partners to deliver packages to grow delivery capacity for sellers and increase delivery speed for customers. “So it's a win-win.” Amazon has also introduced a packaging-free shipment programme in nine cities in the country. The aim is to reduce waste by shipping orders in their original packaging and combining multiple shipments in a reusable crate or a corrugated box. This is going to be a big part of the firm’s shipment zero program, a vision to make all Amazon shipment net carbon zero, he said.

“So, we think there's a lot of shared purpose there and a good quarter where we're looking forward to (is) the Diwali holiday this year,” said Olsavsky. The Diwali shopping events by the company last year all took place in Q4 whereas this year, they would happen in Q3 based on the timing of the holiday. That has been factored into the firm’s revenue growth rate for the quarter.

Amazon and Flipkart, as well as the yet to be launched e-commerce business of Reliance Industries, are eyeing the online retail market which is expected to touch $200 billion by 2028, from about $30 billion last year. At a time when the Amazon has signed off from China, it has stepped up its investment in India and recently pumped Rs 2,800 crore into its marketplace. In December last year, it invested Rs 2,200 crore into its Indian entity. Jeff Bezos-led Amazon has so far made over $5 billion investment (about Rs 35,000 crore) in India.

Global rival Walmart is also looking at using $1.2 billion of its cash reserves parked outside the US to fund the operations of Flipkart, according to a regulatory filing made in June this year.

First Published: Fri, July 26 2019. 19:56 IST
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