Amazon announced in July 2014 that it would further invest $2 billion in India to expand its operation, fueling the competition in one of the fastest growing e-commerce markets. The online retailer launched its Indian marketplace in June 2013 and in just over a year the revenues are close to crossing the $1 billion mark. The large consumer population along with the rapid adoption rate of smartphones has fostered this fast-paced growth.
Amazon’s move can be considered as one to step up its game. Amazon faces competition from Alibaba, a Chinese online retailer, whose total revenues were more than triple the revenues of Amazon. Alibaba enjoys exclusive access to the enormous Chinese e-commerce market, and is protected from foreign businesses penetrating its market segment. Recently, Alibaba’s IPO in the US market was ranked as the world’s biggest at $25 billion (Reuters, September 2014). Entering the Indian market and now expanding operations to increase revenues will help Amazon be more competitive.
In a recent trip to India, Amazon CEO Jeff Bezos had met Indian Prime Minister, Narendra Modi to discuss his expansion plans in the country. In a statement, the CEO claimed “With this additional investment of $2 billion, our team can continue to think big, innovate, and raise the bar for customers in India.” (Times of India, July 2014). Both sides will greatly benefit from the expansion plans of Amazon.
Citations:
1. Reuters (July 30, 2014), Times of India, “India set to become Amazon’s fastest-growing market: CEO Jeff Bezos”
<http://timesofindia.indiatimes.com/tech/tech-news/India-set-to-become-Amazons-fastest-growing-market-CEO-Jeff-Bezos/articleshow/39298577.cms>
2. Elzio Barreto (September 22, 2014), Reuters, “Alibaba IPO ranks as world’s biggest after additional shares sold”
<http://www.reuters.com/article/2014/09/22/us-alibaba-ipo-value-idUSKCN0HH0A620140922>