Amazon India Losing $1 Billion Every Year; Will Hit $81 Billion GMV by 2025: Report
An interesting ecommerce report by Bank of America-Merrill Lynch predicts that India will transform into Amazon’s most important market after USA, accounting for 20% of it’s overall GMV in the next 10 years.
However, despite aggressive growth rate, the report says that Flipkart will remain India’s top e commerce portal by 2025. At the same time, the market share of Snapdeal will continue to decrease, leaving Amazon and Flipkart as the top two ecommerce portals in India.
Interestingly, the report omits Alibaba effect into the ecommerce battle in India; a factor we can no longer ignore.
Amazon’s Most Important Non-US Market Is India
As per the report, Amazon India’s GMV will hit $81 billion by 2025, with $2.2 billion of operating profit. This will make India as 2nd biggest market for Amazon after USA.
Currently, Amazon India holds 21% share in the ecommerce market (2015 data), which will increase to 37% by 2019.
If we go by numbers, then Amazon India churned out $3.7 billion as gross GMV in 2015, which will swell to $5.5 billion by the end of 2016. By 2020, it is expected that Amazon will hit $23.7 billion in gross GMV, thereby making net profit of $2.6 billion.
At the same time, the report warns that Amazon is losing approximately $1 billion every year in India.
Flipkart Would Be Numero-Uno in India
Amazon’s aggressive stand in India is not being wasted, and it’s experiencing a healthy growth rate.
But still, Amazon would be behind Flipkart by 2025.
As per the report, Flipkart will command 44% market share in ecommerce by 2019, compared to 37% by Amazon.
Interestingly, we had reported few days back that Amazon has been able to beat Flipkart for 2nd straight month, and we had analysed how this can be a major factor for the oncoming festive season.
But none the less, price is the most important factor for e-shopping in India, and Flipkart is already the champion of low-price; and maybe this factor was considered in the report as well.
In order to close the gap, and beat Flipkart, Amazon has intensified their operations in India. Recently, Amazon confirmed that they will have 27 fulfillment centers in India, covering 2.7 million square feet of space and storage capacity of 7.5 million cubic feet by the end of September, 2016.
The report also mentions the demise of Snapdeal, gradually. As per the predictions of the report, Snapdeal’s market share will decrease to 9% by 2019, from current 14%. Snapdeal had recently revamped their brand identity and introduced a new logo; besides launching a premium service like Amazon Prime and Flipkart Assured.
Considering the fact that there is no Alibaba factor included in the report, the predictions seems a bit off-the-mark, especially when we consider the role of Snapdeal, vis-a-vis Alibaba and Paytm. Besides, at a time when Flipkart is delivering Paytm’s orders, a new twist in the story is possible anytime.
Can Amazon beat Flipkart in India? How will Alibaba influence the whole ecommerce battle in India? Do share your views by commenting right here!