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Ten years in, India is one of Amazon.com Inc.’s fastest-growing and biggest markets with a large ‘Prime’ customer base, according to Bernstein. But is that a success?
This “growth has come at a high cost of over $6.5 billion invested to-date, while profitability remains elusive”, the research house said in a note dated Aug. 30. The Jeff Bezos-founded e-commerce platform also “faces immense competitive pressure in fast-growing categories, weaker value proposition in ‘new’ commerce, limited traction in tier-II, III cities, and an unfavourable regulatory environment for outsiders”.
According to Bernstein, India is one of few large and under-penetrated e-commerce markets but Amazon has faced challenges due to its “fragmented competitive landscape”.
“While India is a three-player market—Amazon, Walmart/Flipkart, and Reliance’s JioMart—the market remains quite fragmented with meaningful market differences by market tier, product category, and distribution models.”
Amazon, it said, leads in core categories such as consumer electronics and has done quite well in tier-I cities with around 50 lakh Prime subscribers. “India, however, still has a low average order value at only around $10 (Rs 790). Besides growth-related investments, profitability has been impacted by a higher mix of low-margin product categories (for instance, smartphones with sub-5% net margins).”
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Image and article originally from www.bqprime.com. Read the original article here.