Amazon India gross sales to hit $32bn in 4 years

Amazon said it faced downtime due to change in government regulations in India. However, Amazon reported 17% growth in net sales globally. India could 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.

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.  Following the implementation of the FDI in ecommerce guidelines on February 1, ecommerce marketplaces were barred from selling products from companies where they own a stake.

The rule also directed that marketplaces will not mandate a seller to sell products exclusively on its platform. It also prohibited the companies from making more than 25% of purchases of a vendor.

“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.

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.

Amazon was earlier in talks to acquire a stake in Future Retail, which runs more than 1,600 stores across food, grocery and general merchandise.  After foreign ownership rules were amended in February, they took the route of a stake sale through Future Coupons so that Amazon could adhere to the rules. 

Indian retailers have a great opportunity for the growth. Amazon has objective of targeting to reach out the off-line retail store, since Indian consumers have a strong faith on the Retailers. Future Retail controls about a third of India’s organised food and grocery market through the Big Bazaar and Nilgiris supermarket chains. Physical stores account for more than 90% of all retail sales in India. 

With the recent announcement of, Amazon bought into the Future Group for about Rs 1,500 crore, with an intention to expand its reach in the Indian brick-and-mortar market retailers in the country. It had picked up a 5% stake in Shoppers Stop and holds a 49% stake in retail chain More. This translates into Amazon valuing Future Retail at more than double its current market capitalisation of about Rs 21,000 crore.