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Amazon India gross sales to hit $32 billion in 4 years: Report

The analyst note reflects India's importance to Amazon at a time when it was forced to make operational changes to comply with the stricter FDI laws for e-commerce here.

Aug 29, 2019, 12.57 PM IST
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(This story originally appeared in on Aug 29, 2019)
India will be one of the major international markets to drive Amazon's international sales, generating gross $32 billion by 2023, as per a report by RBC Capital Markets. Amazon India is expected to have a market share of 35% in e-commerce by 2023, up from 30% at the end of 2018. Among the international markets of Brazil, Mexico, Turkey and Australia, India would have the highest contribution to Amazon's online sales. It is the largest factor among the 'big five' countries mentioned in the note.

In fact, the report-authored by veteran technology analyst Mark Mahaney-estimated India would be contributing 13% of Amazon's international sales and 4% of total sales in the next four years.

Amazon does not provide a breakup of country-based revenue or sales in its earnings release of quarterly international sales. As of now, Germany is the largest international market for Amazon. India is excepted to generate revenues, which includes marketplace commission from gross sales besides direct sales, of $18 billion, Mahaney noted. To be sure, the e-tailer has already invested over $6 billion in India since entering the market in 2013.

"India's e-commerce sales are expected to be the second-fastest growing among the top 10 APAC countries, at 26% three-year annual growth, thanks in part to its low (5%) e-commerce penetration, which compares to 24% in China and 9% in Japan. Overall, we believe this growth will be driven by the rising rate of smartphone adoption, rapidly growing middle class, influence of its young population and growing penetration of e-commerce players like Amazon and Flipkart," the note by RBC Capital added. Last year, Walmart acquired 77% stake in Flipkart for $16 billion. Both Amazon and Walmart (Flipkart) are fighting to win over this market.

As per the estimates, India's e-commerce penetration could end up at just under 6% in 2019 and reach 9.5% in 2023. Among other international markets, e-commerce penetrations were at 14% in the US, 17% in the UK, 11% in Germany, and 9% in Canada and Japan.

An Amazon India spokesperson said the company cannot comment on speculation or projections about the future. "We continue to invest in technology and infrastructure to enable our growing seller network to have access to domestic and global markets and are focused on bringing more and more customers online," the spokesperson said in a statement to TOI.

The analyst note reflects India's importance to Amazon at a time when it was forced to make operational changes to comply with the stricter FDI laws for e-commerce here. Despite the regulatory changes, Amazon has remained bullish on India and has also been busy making investments in the offline retail space. Earlier this month, TOI reported that Amazon bought into the Future Group for about Rs 1,500 crore, gaining access to one of the largest brick-and-mortar retailers in the country. It had picked up a 5% stake in Shoppers Stop and holds a 49% stake in retail chain

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