Amazon Increases Investment In India To Strike Back At Walmart

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On the deck for decades now, Walmart has been striving to pillow its online offerings, in the ever-growing eCommerce sector. The upshot of Walmart’s interest in India is the latest sequel to the erstwhile retailer’s battle with Amazon. However, in a quick retaliation, Amazon’s vision to expand globally, strikes payback to Walmart, according to Morgan Stanley.

Amazon.com just increased its entire capital investment in India from $5 billion to $7 billion. That’s a considerable $2 billion rise from 2016 when the company decided to invest $5 billion in India.

Sealing the deal in May, Walmart acquired Indian e-commerce giant Flipkart. This merger, odds-on, augmented the competitive dynamics above the long-standing Cold War between the two retail titans. In response, Amazon is now, reportedly, raising its investment in India to compete with Walmart, which now boasts of the No.1 space in the eCommerce Market of India, post Flipkart acquisition.

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In addition to investing billions into its Indian e-commerce site, Amazon is also investing in original content from Bollywood movies to develop products, such as Prime video.

Extending Rivalry Across Overseas Market?

India is one huge untapped market projected to grow rapidly, and as a result, a harbour for aspiring business for an expanded global footprint.

Walmart Acquired Flipkart is invested in by New York-based Tiger Global Management and now by Tencent Holdings and Microsoft Corp. Again, as per provisions by the Union government, it is now the largest employer of unskilled and semi-skilled labour mass. With employment in back-office operations, delivery, logistics and warehousing, it has certainly filled the unemployment gap.

Given Walmart’s anchor in India, Amazon came up, sensing the need to buck up for an intense competition. In the aftermath, Amazon India declared its recruitment of 8,000 people in the logistics department. Amazon’s keen retaliation didn’t go unnoticed. As a matter of fact, Amazon’s assault was so deep that a couple of years ago, when Walmart’s Acquisition was not doing rounds, some analysts projected that Amazon may probably crush any competition it encounters.

Amazon already sells groceries in India after getting government approval last year while Flipkart is yet to expand its grocery horizons.

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A Spurring Indian eCommerce Market

A March 22 report by US-based Forrester Research claimed that the online retail market in India is projected at a CAGR of 29.2%, crossing over $73 billion in 2022, representing nearly 5.7% of total retail sales. Additionally, another report by BMI Research expects that the Indian online-market to grow more than $80 billion by 2021, from about $48 billion in 2017, with an annual rate of about 19%. Projected to keep growing, there are estimates that the market will be worth $200 billion by 2026.

Over the last half-a-decade or so, the Indian eCommerce sector has witnessed a deceleration. According to Forrester, these resulted due to many regulatory actions like new guidelines for foreign direct investment (FDI), the whole demonetization-fiasco which led to huge cash-slack from consumers, and the new goods and services tax regime which was a clear checkmate on the part of consumer expenditure. Yet, India, with its $27 billion e-commerce market, may soon dog the footsteps of Australia’s that stands at $31 billion.

Amazon has already strengthened its position in the country, as metropolitan Indian consumer’s resort more to hassle-free online-retail and delivery options. As aggressively as it can, Amazon is closing gaps with its incumbents to become the single-largest online retailer in India in terms of sales, according to Forrester.

With the untapped market, left free, India is one promising e-commerce outlook. Given this fact, it’s a domain for other companies to emerge, claim and conquer, wherein there’s no flinching back in spending dollars to gain the market share. As a highly competitive market, it’s gushing in with sought-after strategies and new players.

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