India plays a big part in the Amazon story, and experts believe that the South Asian nation will play a significant role in growing the U.S. retail giant’s market cap.
Last month, Amazon opened its new mega-office in the southern tech hub of Hyderabad, India. The building, which houses 15,000 employees, contains over 2.5 times more steel than the Eiffel Tower, measured by weight, and is spread over 9.5 acres of land. The decision to open its biggest building in the world is part of Amazon’s plan to acquire a major slice of the Indian market – a huge yet relatively untapped market projected to grow rapidly.
For the Jeff Bezos-led company, India, a nation of 1.3 billion people, is a “very important geography”. But it faces some intense competition in the country. Walmart, which bought a 77% share in local e-commerce giant Flipkart, is standing on its way.
Amazon and Flipkart will also face a fierce battle with Mukesh Ambani’s conglomerate Reliance Industries. Asia’s richest man will launch his own e-commerce platform to go against the two U.S. companies.
Amazon Faces New E-commerce Regulations
The company also has to deal with new Indian-e-commerce rules that took effect in February. The rules do not allow e-commerce sites to “exercise ownership or control over the inventory” of sellers.
Brick and mortar retailers complained that e-tailers were unfairly selling products at discount prices.
“Going forward, the challenges are more around regulation and how to navigate the policy and regulatory environment,” Ankur Bisen of Delhi-based consulting firm Technopak said. “We have seen how some of the policy announcements have got them off-guard.”
The expansion of Amazon to India has cost the company $5 billion.
The country’s e-commerce sales might pass the $100 billion mark. This figure is from the recent research by industry body Nasscom and PricewaterhouseCoopers.
Meanwhile, despite the big losses incurred by Flipkart, Walmart remains confident. “We continue to believe it is a very sound long-term investment in a compelling market,” the company said.
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