Amazon, the e-commerce giant, is celebrating its decade-long presence in India. As a part of the celebration, the company has announced that it will waive off 10% of the seller fee for all transactions on June 5, 2023. This move is expected to benefit over 1.2 million sellers on its platform, making it easier and more profitable for them to conduct business.
Since its India operations began in June 2013, Amazon has invested over $6.5 billion to grow categories like e-commerce and video streaming through Prime. The company has launched vernacular languages on its platform, introduced two-hour deliveries, and announced Amazon Smbhav, a $250-million capital pool through which it invests in Indian direct-to-consumer (D2C) companies. However, it has also rolled back several initiatives like Amazon Food and Amazon Academy, which would be shuttered in a phased manner starting August 2023.
In a blog post published on June 4, Manish Tiwary, country manager, India Consumer Business, Amazon said, “It’s been an incredible journey of making an Amazon in India, for India. We are truly just getting started. With a young and vibrant population, rising income levels, and increasing penetration of (the) internet and social media, the future is exciting.”
Despite talks of downsizing, Amazon pledges to digitise 10 million small businesses, enable $20 billion in exports, and create 2 million jobs by 2025. Amazon has already digitised over 4 million small businesses, enabled over $5 billion in cumulative exports, and created more than 1.1 million direct and indirect jobs.
However, according to analysts at Bernstein, profit remains elusive for Amazon India even after investing over $6.5 billion. Competitors, like the Flipkart group, are gaining ground in categories like smartphones and apparel. Furthermore, newer companies like SoftBank-funded Meesho continue to increase their market share in Tier 2 and Tier 3 cities.
Despite these challenges, Amazon remains upbeat about its future in India. Tiwary said, “We remain committed to innovating for customers, and enabling small businesses and startups to contribute to India’s vision of becoming a $1 trillion digital economy.”
While Amazon is optimistic about its future, the growth path for e-commerce players in India seems difficult. According to analysts at Redseer, the growth in e-commerce gross merchandise value (GMV) has slowed down due to price pressures, fewer online shoppers, and stagnating average dollar spend per shopper. E-tailing GMV grew by about 44% from $25 billion in FY20 to $36 billion in FY21. However, the pace of YoY growth slowed to 22% in FY23 when the GMV increased to $60 billion.
Despite these challenges, Amazon is committed to being a major player in India’s digital economy and is taking steps to help small businesses thrive in the country.