India's E-Commerce Market to Grow to $133 Billion by 2025 – Report

As per the Bernstein report, India's e-commerce market which amounted to $72 billion in 2022 is likely to hit $133 billion in size by 2025.

In a report on Wednesday, the U.S. asset management firm said the Indian e-commerce market is expected to reach $133 billion by 2025 from $24 billion in 2018, a rise of over five times with a compound annual growth rate of around 30%. "This is a $100-billion incremental opportunity with only three scaled players in the market (Amazon.com Inc., Reliance and Walmart Inc.)," it said. "The winner The winner in the Indian e-commerce market will be the one with the most compelling integrated value proposition, offline + online + prime.

Amazon, which has recently pledged $12.7 billion investment in Amazon Web Services in India hints the company’s focus towards cloud services in the South Asian market. Bernstein’s report suggests that while Amazon’s cloud business operates with losses of merely $500,000 to $1 million, the e-commerce division of Amazon in India, has lost up to $500 million.

About Reliance, its retail subsidiary Reliance Retail already operates India’s largest retail chain with over 18,000 stores. The report suggests that the conglomerate’s expansive physical presence, bolstered by numerous recent acquisitions of retail companies with a focus on e-commerce, and a partnership with Meta (Facebook) to develop a small business communication platform through WhatsApp Business, constitute a formidable “competitive moat” for the Indian powerhouse. E-commerce still accounts for less than 10% of India’s overall retail.

AJIO, a fashion and lifestyle brand, is Reliance Retail's digital commerce initiative and Reliance recently launched AJIO STREET, an e-commerce platform with low-cost products. AJIO STREET guarantees the “lowest price” for its offerings, waives delivery charges, and promises a straightforward returns process.

Whereas, Flipkart, which primarily relies on the wireless and mobile category, accounting for half of e-commerce sales in India, is facing concerns as the country’s smartphone shipments slow. Moreover, the lower-margin nature of the smartphone category necessitates both Flipkart and Amazon to grow their high-margin categories.

Bernstein values Reliance Retail’s e-commerce business at $36.4 billion, surpassing Flipkart’s adjusted $33 billion valuation after the spin-off of PhonePe. The wealth management firm values Reliance Retail at $110.9 billion.

Notably, being foreign entities Amazon and Walmart owned Flipkart has marketplace model and cannot own, sell, and price goods directly. Whereas, Reliance’s inventory-led model allows it to navigate these challenges with inventory control, pricing autonomy, and an enhanced customer experience.


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