Around two years ago, a venture capital firm was considering investing in a fast-commerce startup in India. The company’s instant delivery model was gaining traction in the South Asian market, outperforming many startups in more developed markets.
However, there was a concern: Would Amazon enter this emerging sector with its significant resources and dominate it? To address this, a partner at the venture firm consulted with contacts in Amazon’s leadership. The response indicated that Amazon had no plans for a quick-commerce offering in India.
In hindsight, Amazon’s decision to overlook this space appears to be a major blunder. Quick-commerce is rapidly growing in popularity in India, offering customers access to various product categories like groceries and electronics with rapid delivery times. The top three quick-commerce firms in India are poised to reach a combined annual sales of approximately $4.5 billion, a substantial portion of Amazon India’s estimated $18 billion in sales.
Observing Amazon’s apparent neglect of this sector, it raises questions about the company’s strategy and priorities in India.
An opportunity overlooked
While U.S. tech giants view India as a crucial international market, the e-commerce sector in the country experienced modest growth compared to the rapid expansion of quick-commerce. The quick-commerce market, fueled by its small base, is expanding by over 125%, presenting a compelling growth opportunity.
These quick-commerce firms are gaining ground at the expense of larger e-commerce players. As they continue to grow, they are reshaping consumer behavior and forging new partnerships with brands, signaling a significant shift in the Indian market landscape.
Amazon’s lack of initiatives in the quick-commerce space contrasts with its competitors’ responses. Flipkart, a key rival, recently launched Flipkart Minutes, an instant commerce service, to compete for urban customers in India.
Analysts are pointing out that Amazon’s inaction in seizing opportunities across different market segments has contributed to its declining market share in India.
A matter of priorities
Industry insiders suggest that Amazon’s strategic focus in India has shifted under Andy Jassy’s leadership, prioritizing the growth of its cloud business over e-commerce operations. This realignment comes as Amazon faces challenges in merchant partnerships and regulatory hurdles in the country.
Despite attempts to diversify its offerings, including efforts in mobile payments and food delivery, Amazon has struggled to adapt to changing consumer preferences in India. The company’s inability to innovate swiftly and address market shifts has hindered its growth potential.
As Amazon faces criticism and competition from local players, its future in the Indian e-commerce landscape remains uncertain.
