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Even after making investments of $6.5 billion in India, profitability remains elusive

E-commerce marketplace Amazon India will continue to try out and invest in new business opportunities, even after the US-based e-tailer discontinued some of its verticals recently, said Manish Tiwary, country manager of Amazon’s India consumer business said in an interview. Brokerage firm Bernstein in a recent report said even after making investments of $6.5 billion in India over the last eight years, profitability remains elusive for Amazon India.

“Our DNA is of an innovator, where we like to try new things. For any new business, we look at if it is going to be big enough, will it be a differentiator, and the technology and economics of it. If you do any innovation, some succeed, some don’t,” Manish Tiwary, country manager of Amazon’s India consumer business said in an interview.

In November, Amazon India said it is winding down its food delivery business, exiting its Amazon Academy online learning platform and discontinuing Amazon Distribution, a wholesale ecommerce website available to kiranas in Bengaluru, Mysore and Hubli. The decision is part of its review process, it said.

Both the edtech vertical and food delivery were launched in 2020, in the middle of the pandemic.

In the case of Amazon Distribution, for instance, Tiwary said it was felt that the business wasn’t able to differentiate itself. Therefore as part of its assessment portfolio review, the company decided to discontinue it and go behind Amazon Business.

“…But even when we are doing something like this, we continue to build new businesses as well. Amazon Live and GlowRoad, as well as pharmacy expansion are great examples,” he added.

Amazon acquired social commerce startup GlowRoad in April, this year. Rival Flipkart, too, had launched Shopsy in 2021, aimed at new e-commerce customers with a zero commission, low-cost marketplace model. Shopsy crossed 100 million users in September 2022.

Tiwary says the reseller base has grown by six times since the Glowroad buyout, and expects the business to grow by many folds in the coming year. Amazon Pharmacy, which was piloted in Bengaluru, and then rolled out nationally, and has partnered with Apollo Hospitals, will also scale up going forward. New businesses such as pharmacy, social commerce, Amazon Live etc comprise about 20% of Amazon’s portfolio in the country.

Brokerage firm Bernstein in a recent report said even after making investments of $6.5 billion in India over the last eight years, profitability remains elusive for Amazon India.

In a predominantly three-player market – Amazon, Flipkart and Reliance’s JioMart, Bernstein estimated that at present, Flipkart leads the Indian e-commerce market with annual sales of $23 billion in 2021, Amazon is the second-biggest player with $18-20 billion of gross merchandise value (GMV) last year and Reliance comes next with $4.6 billion of e-commerce sales. Livemint

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