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Amazon may eventually capture the e-commerce market in India

USA-TRADE/NAFTA-MEXICO Indian e-commerce market is still to be penetrated and there is a lot of untapped opportunities for market players | Reuters (File photo)

Going by the present trend, Amazon India may eventually capture the Indian e-commerce market. Experts say that as the company was not very successful in the Chinese market, all its focus would be on the Indian market and it is going all out on the same by pumping in a lot of cash. On the other hand, Flipkart will require additional round of funding to stay ahead in the Indian e-commerce market.

Media reports say that Amazon is aiming to hire around 1,000 people in India and has also recently entered into a tie up with Titan to sell its products in the US. Titan’s collaboration with Amazon is expected to help Titan foray into the US market and reach out to Amazon’s consumer base internationally. Its nearest competitor Flipkart, on the other hand, had laid off people and does not have exposure in the US market.

Experts also say that Amazon is spending heavily on advertisements whereas Flipkart has reduced its advertising spend. This will be crucial as by spending heavily on brand building and advertising, brand Amazon will get etched in people's mind and the first choice for online buying will be Amazon for Indians.

When contacted by THE WEEK on the hiring in India, the spokesperson for Amazon stated that India is a key growth region for the company and it is looking at hiring for varied skill sets across different types of jobs such as engineers, data scientists across different locations in the country. The spokesperson said that the company is also looking at hiring research scientists, where Machine Learning and Artificial Intelligence are so pervasive through Amazon’s ecosystem.

“We are also looking at candidates who have done research in Machine Learning, Deep Learning, Computer Vision and Natural Language Processing amongst other categories. As we process a lot of data, we are always hiring data engineers who will be able to build highly performing cross data pipelines and processing infrastructure. At the same time, we are always on the lookout for Android application developers who can solve some of the tough challenges with us and in many ways, help reinvent the Amazon application experience,” stated the Amazon India spokesperson.

Experts such as Amit Chandra, IT analyst at the Mumbai based HDFC Securities, feel that India is a very cost driven market and Amazon is burning cash in India to capture the Indian e-commerce market. “Amazon India has the money power with them as Amazon is one of the largest cloud computing player in the world. Though Amazon's losses have widened as far as its India investments is concerned its cloud and web services business is doing extremely well and all that cash is being pumped in to capture the Indian market. Though Flipkart had an edge in terms of its delivery mechanism, and its cash on delivery had become popular, it is fading away. Amazon has strengthened its delivery mechanism,” said Chandra.

Experts such as Kris Lakshmikanth, the founder of the recruitment firm Head Hunters Limited, that Flipkart is purely surviving on investor money whereas Amazon has its own money routed from its cloud and web services business and is on a killing spree and wants to kill Flipkart. “Amazon has also slowly entered the food retail segment which Flipkart has not. The way the company is promoting its offers and advertising big time, everyone will start recognising Amazon and it will be their first choice eventually,” said Lakshmikanth.

Experts such as Krishna Chaudhary, senior business analyst at the Bengaluru-based RedSeer Consulting, says that the Indian online retail market is still to be penetrated and there's a lot to gain for Flipkart and Amazon in the upcoming years. “Rather than focusing on international presence Flipkart as a company would rather focus on increasing its active customer base, the customer spends, margins and revenue etc. in India. On the hiring front, Amazon had started with a low base in terms of the number of people and, hence, is currently hiring more. Flipkart aggressively hired until last year and still continues to hire in small numbers. For Amazon, India business has witnessed tremendous growth in the past years and, hence, it is the most important focus market outside the US currently. Therefore, they would continue to invest in people, technology, partners etc. For Flipkart, although hiring has slowed down in the recent year, the utilisation of existing manpower has increased making the company as a whole more efficient. With the recent funding, Flipkart is also expected to hire more to expand their businesses,” Chaudhary said.

This analyst also observes that after having a 190 per cent growth YOY (year-on-year) growth in 2015, the industry had a brief slowdown in 2016 (12-13 per cent growth), but the industry has picked up momentum again with 20 per cent YOY growth in April-May-June 2017. Chaudhary also observes that the e-commerce market is hugely under-penetrated with a 2 per cent online penetration as the online market currently stands at $ 14-15 billion out of a $ 690-700 billion overall retail market.

“For some of the mature markets, the online penetration stands as high as 12-13 per cent. So it is just the beginning for the Indian market and there's lot of untapped opportunity for all the players,” added Chaudhary.

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