May 30, 2024
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by  MONEYCONTROL NEWS

To celebrate 10 years in India, Amazon will reduce seller fees by 10 percent on June 5

During the first year of Amazon’s India operations, on June 5, 2013, it invested over $6.5 billion in growing categories such as e-commerce and video streaming. In addition to two-hour deliveries, Amazon Smbhav, and vernacular languages, it also launched Amazon Smbhav.

On June 5, 2023, Amazon, the e-commerce giant, will waive off a 10 percent seller fee for all transactions as it celebrates a decade of presence in India. Over 1.2 million sellers sell on the Seattle-based company’s platform, which is close to its closest competitor, Walmart-owned Flipkart, which has over 1.1 million sellers.

Through Prime, Amazon has invested more than $6.5 billion in growing categories such as e-commerce and video streaming since June 5, 2013. Among other things, Amazon introduced vernacular languages on its platform, two-hour deliveries, and Amazon Smbhav, a $250 million investment fund that invests in Indian direct-to-consumer (D2C) companies.

The future is exciting

Amazon has also rolled back several initiatives, including Amazon Food and Amazon Academy, which will be phased out beginning in August 2023.

Making an Amazon in India, for India, has been an incredible journey. We are just getting started. In a blog post published on June 4, Manish Tiwary, Amazon’s country manager, India Consumer Business, wrote that the future is exciting with a young and vibrant population, rising income levels, and increasing penetration of (the) internet and social media.

Amazon pledged to deliver more after digitising over 4 million small businesses, enabling over $5 billion in cumulative exports, and creating over 1.1 million direct and indirect jobs. The company plans to digitise 10 million small businesses by 2025, export $20 billion, and create 2 million jobs by then.

The company skipped any mention of India’s performance in its latest quarterly update, despite talks of Amazon downsizing its Indian operations.

According to Bernstein analysts, even after investing over $6.5 billion in Amazon India, profit remains elusive as competitors, like Flipkart, gain market share in smartphones and apparel. Newer companies like SoftBank-backed Meesho continue to gain market share in Tier 2 and Tier 3 cities.

“We remain committed to innovating for customers, and enabling small businesses and startups to contribute to India’s vision of becoming a $1 trillion digital economy,” Tiwary concluded.

Is the road ahead difficult?

It appears that e-commerce players in general have a hard time growing. Analysts at Redseer, a consultancy, noted last month that e-commerce gross merchandise value (GMV) was slowing after several years of growth. From $25 billion in FY20 to $36 billion in FY21, e-tailing GMV grew by 44 percent. In FY22, it increased by 36 percent year-on-year (YoY) to $49 billion.

As the GMV increased to $60 billion in FY23, YoY growth slowed to 22 percent.

According to Redseer, the slowdown was largely caused by price pressures, fewer online shoppers, and stagnant average dollar spend per shopper.

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