Amazon is improving its foothold in India and the American e-commerce giant could be the second biggest player after Flipkart in the online retail market by 2019, says a new Bank of America Merrill Lynch report.
India could also become Amazon’s second largest market (after the US) as it plans to invest $5 billion in its India business, the report released on Tuesday said.
“For last couple of months, Amazon India gross sales are higher than that of Flipkart standalone (excluding Myntra),” it added.
“We now expect Amazon’s GMV (gross merchandise value) market share to improve to 37 per cent by 2019 from 21 per cent in 2015 and expect it to be close No 2 behind Flipkart,” the report said.
While revenues are relatively small to Amazon’s global scale, Amazon India could generate $81 billion in GMV and $2.2bn in operating profit by 2025.
Most of Amazon’s gains have come at the expense of Snapdeal and other sellers, not Flipkart, according to the report.
Flipkart still remains the market leader in India and “even in terms of customer satisfaction, reports indicate that it remains the leader, ahead of both Amazon and Snapdeal”, according to the report.
Amazon has been able to benefit from global brand and establishing reliability of service among consumers, concentrating on offering superior customer service and wider assortment of products.
Amazon has also tied up with Vakrangee, a franchisee with strong presence in rural/underdeveloped areas to fortify its rural presence at relatively lower investments.
As of June this year, Amazon is already active in more than 1,000 outlets, with plans to increase to 75,000 outlets by 2020, the report noted.
Alibaba is looking to enter into the Indian e-commerce market by early next year as a more direct entry, despite it having investments in PayTM/Snapdeal.
“We note that similar to Amazon, Alibaba likely considers India as the next big market apart from its home market and is looking to gain traction there,” the report said.