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.
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