In Pursuit Of The Next Multitrillion-Dollar Opportunity, Amazon.com, Inc. (NASDAQ:AMZN) Turns Focus On India
Amazon.com, Inc. (NASDAQ:AMZN) is convinced that India is shaping up to be the next big eCommerce opportunity, and the company is putting itself in the ring – to fight for space. It is a serious battle as Amazon has to overcome homegrown competition, invest in infrastructure and fight unfavorable trade policies. India has a law that prevents foreign companies from selling products directly to its citizen, a law that for the time being will restrict Amazon to the position of an e-commerce broker for merchants.
Despite the challenges of penetrating Indian e-commerce market, Amazon.com, Inc. (NASDAQ:AMZN) cannot afford to stay out. Over the next decade, Amazon’s VP of International Retail, Diego Piacentini, says the opportunity in India will be worth trillions of dollars, not billions. That explains why the company is ready to do things in India that it has never done elsewhere, but that is also coming at a cost. However, for the company known for sacrificing profits on the altar of revenue growth, Amazon is comfortable with its strategy in India.
Besides massive financial investment, Amazon will also have to overcome fierce competition as it expands base in India. Homegrown competitors Snapdeal and Flipkart continue to get better and they are threatening to give Amazon a serious run for its dollars in the market.
No matter the obstacles, Amazon.com, Inc. (NASDAQ:AMZN) cannot be persuaded to give up on India or delay and come back later. The company is willing to put up with whatever challenges there are because of the opportunity that is about to open up in front of it.
It is estimated that India’s population will surpass that of China in the next seven years. Currently, India’s population of 1.25 billion is not only four times that of the U.S., but is also double the population of the whole of Europe. That’s a huge market.
Not only is India promising as a huge market because of its population, but the country’s economy is also growing at a decent pace. The IMF estimates that India is the fastest growing major economy in the world, with economic growth of 7.5% expected in 2016.
The law that prohibits companies like Amazon.com, Inc. (NASDAQ:AMZN) from selling directly to Indians is certainly a serious challenge, but Amazon can hope that it will be abolished over time.
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