amzon india e1526883575303

Within a few weeks after Walmart announced acquiring an initial stake of about 77 percent in Flipkart, India’s top e-commerce company, for $16 billion, US-based technology giant Amazon’s India business could be valued at $16 billion right now and is expected to reach $70 billion in gross merchandise volume (GMV) and $11 billion in net sales by 2027, according to a report by Citi Research released last week.

“We believe the India e-commerce market will grow at a 21% CAGR over the next 10 years to $202bn, that Amazon could capture 35% of this market. … That suggests that Amazon India could be currently worth $16bn,” Citi’s senior analyst Mark May said in a note to clients Thursday. “In short, not only do we believe that investors continue to under-estimate the value of Amazon’s existing Emerging International Retail Markets businesses, but also the pace and value of its recent international expansion efforts.”

A valuation of $16 billion makes the business worth more than 170 companies in the S&P 500, including Clorox, Macy’s and Tiffany & Co.

Notably, Amazon has committed to spending $5 billion to build its business in India, whose population of 1.3 billion makes it the world’s second-largest country.

Amazon’s investments in India have been consistent with a strategy for long-term success. For instance, the company has aggressively built out its distribution network to service the third-party sellers and customers it serves in the market.

Speaking about Indian ecommerce market, it is currently pegged at $30 billion and is expected to be worth $200 billion by calendar year 2026, according to a report by investment bank Morgan Stanley.

RELATED READING  Amazon launches Military Veterans Employment Programme in India

It is also to be noted that this valuation of Amazon’s India business is not based on a transaction like the Flipkart-Walmart deal, it would probably make Amazon India the second-most valued internet business in the country after it’s rival Flipkart.

Amazon’s main India unit Amazon Seller Services posted a 41% rise in FY’17 revenue to Rs 3,128 crore, according to filings before the Registrar of Companies. Amazon Internet Services, the re-seller for cloud business under Amazon Web Services (AWS) in India, saw its revenues grow to $406 million (about Rs 2,636 crore) in December 2017 from $307 million (about Rs 1,993 crore) a year earlier, according to the regulatory filing.

Flipkart, including its subsidiaries — Myntra and Jabong, had a combined market share of 39.1%, and Amazon India 31.1%, according to Forrester Research. Alibaba and SoftBank-backed Paytm Mall had a market share of about 5.6% in 2017, it’s first full year of operations.

Recently, it was also reported that the e-commerce arm of India’s payment giant PayTM — PayTM Mall, is expected to raise $600 million from Japan’s Softbank.

Meanwhile, social networking giant Facebook has also announced that it is on verge of launching its own e-commerce platform, and is currently in talks with several brands and businesses in India to list on Facebook Marketplace. It will begin testing business-to-consumer (B2C) transactions on the marketplace this month ahead of a soft launch planned for June.

Via – Economic Times

Like this content? Sign up for our daily newsletter to get latest updates.



This site uses Akismet to reduce spam. Learn how your comment data is processed.

You may also like