Amazon India has posted an 88 per cent jump in gross sales volume for June quarter, outpacing growth of broader online retail market. The retailer’s growth has been largely driven by existing and new customers, with key market share gains in categories such as smart phones.
Over the past four years, Amazon has invested aggressively in India, committing to spend $5 billion to grow its business in the country. Amazon has been spending money on building massive warehouses, a large logistics unit, marketing, discounts and on increasing product assortment in India. These efforts have translated into a significant lead in key metrics such as app downloads, desktop visits and mobile website visits.
The Indian online retail market continues to grow but at a slower pace than was previously expected. There was a temporary break in growth last year due to demonetization. Moreover discounting has reduced over the past few quarters. Over the past year, most of Amazon’s key initiatives including the launch of Prime have helped expand the e-commerce market in India.
Both Flipkart and Amazon would continue to do well in the near term but for either of them to pull away and open a massive lead over the other, one of them has to make a huge mistake or goof-up. Otherwise, this should be a long-drawn-out battle, believes Harish of Grant Thornton.