The popular perception is that Flipkart has ruled the roost in India, at least in recent times. The much-talked about mega deal with Walmart presumably gave it an even bigger advantage over Amazon. But a recent Citi Research report reportedly pegged Amazon India’s market share at 30 per cent – the same as the Bangalore-based company – and valued it at $16 billion. Of course, the recent Walmart acquisition of Flipkart valued the latter much higher at $20-22 billion.

According to media reports, the Citi Research note added that “We believe the India e-commerce market will grow at a 21 per cent CAGR over the next 10 years to $202 billion, that Amazon could capture 35 per cent of this market and that the company could generate more than $10 billion in revenue and nearly $1.5 billion in FCF (free cash flow) by 2027.” The report’s authors Mark May and Hao Yan added that it is poised to grow at 23 per cent annually until 2027, taking Amazon India to $70 billion in gross merchandise volume (GMV) and $11 billion in revenue.

The duo, according to The Economic Times, used a discounted cash flow model to arrive at Amazon India’s valuation and the numbers don’t take into account its growing cloud business here, which has been valued separately. “Most of the value of Amazon right now comes from the dominant retail position in North America and AWS business. Right now, India is very marginal. But these companies are here today because they know in 5-10 years, India will be a big economy where they need market share,” Rahul Chowdhri, a partner at venture capital firm Stellaris, told the daily.



Amazon India’s current GMV is estimated to be around $5 billion, while Flipkart and its subsidiary Myntra recorded GMV of $7.5 billion in the last fiscal. But Jeff Bezos’ India arm fully intends to aggressively play catch up. According to Forbes, the authors also pointed out that “Amazon’s founder and CEO Jeff Bezos had mentioned last year that he learned a key lesson in China that he does not plan to repeat in India – not being aggressive enough, and not investing enough.”

To remind you, Bezos has already announced a $5 billion war chest for India. Then, in his latest annual letter to shareholders, Amazon’s head listed India among the company’s “recent milestones” saying that “Amazon.in is the fastest growing marketplace in India and the most visited site on both desktop and mobile”. He also mentioned that Prime added more members in India in its first year than any previous geography in Amazon’s history. Incidentally, 13 years post-launch, Prime members globally now exceed 100 million.

The same bullish attitude on India was reiterated on an earnings call after announcing the results. “We’ll continue to invest in India where we’re seeing great progress with both sellers and also customers. And we like the momentum we’ve seen there,” said Brian Olsavsky, the company’s CFO, adding, “We’re adding local content in India, video content. We’re also adding other benefits, Prime benefits. We’re rolling out devices there, and we’re seeing Indian developers developing skills for Alexa.”
So the bottomline is that the fact that Amazon India is yet to post a profit – on the contrary, Amazon’s international business posted a 29 per cent jump in losses in the quarter ended March, most due to India – isn’t going to scare it away.



In fact, last month it announced plans to set up five more warehouses in as many cities, including Bengaluru, Gurgaon and Mumbai, in order to strengthen its delivery capabilities and take on Flipkart. With this new addition, Amazon will have 67 fulfilment centres in 13 states, with a total storage capacity of over 20 million cubic feet, it said in a statement. These FCs are scheduled to be fully operational before the festive season of 2018.

With pundits plotting India as one of the world’s fastest growing e-commerce markets, you can safely expect the fight for this red-hot pie to get even more aggressive here on. Apart from arch rivals Amazon India and now Walmart-controlled Flipkart, there’s Paytm E-commerce Pvt Ltd. The relatively new entrant is not to be taken lightly since it is backed by China’s Alibaba Group Holding Ltd and the buzz is that SoftBank is considering investing as much as $3 billion more in it.
And customers can look forward to even more discounts and promotions thanks to this rapidly-unfolding three-way race.



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