{"id":1195319,"date":"2022-08-31T07:23:48","date_gmt":"2022-08-31T07:23:48","guid":{"rendered":"https:\/\/www.ghanamma.com\/2022\/08\/31\/amazon-facing-unfavorable-regulatory-environment-struggles-to-expand-in-india\/"},"modified":"2022-08-31T07:23:48","modified_gmt":"2022-08-31T07:23:48","slug":"amazon-facing-unfavorable-regulatory-environment-struggles-to-expand-in-india","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2022\/08\/31\/amazon-facing-unfavorable-regulatory-environment-struggles-to-expand-in-india\/","title":{"rendered":"Amazon, facing \u2018unfavorable\u2019 regulatory environment, struggles to expand in India \u2013"},"content":{"rendered":"<p><\/p>\n<div>\n<p id=\"speakable-summary\">Amazon is lagging its chief rival Flipkart in India on several key metrics and struggling to make inroads in smaller Indian cities and towns, according to a scathing report by investment firm Sanford C. Bernstein.<\/p>\n<p>The American e-commerce giant\u2019s 2021 gross merchandise value in the country, where it has deployed over $6.5 billion, stood between $18 billion to $20 billion, lagging Flipkart\u2019s $23 billion, the analysts said in a report to clients Tuesday that was obtained by .<\/p>\n<p>India is a key overseas market for Amazon, where it competes with Mukesh Ambani\u2019s Reliance Retail, which launched grocery shopping on WhatsApp this week,\u00a0Walmart-owned Flipkart and social commerce startups SoftBank-backed Meesho and Tiger Global-backed DealShare. Amazon has so far offered \u201ca weaker proposition in \u2018new\u2019 commerce\u201d in the country, the report added.<\/p>\n<p>At stake is one of the world\u2019s last great growth markets. The e-commerce spending in India, the world\u2019s second largest internet market, is expected to double in size to over $130 billion by 2025. Amazon has been attempting to increase its presence in India through stakes in local firms and has also aggressively explored partnerships with neighbourhood stores.<\/p>\n<p>The company attempted to acquire Future Retail, India\u2019s second largest retail chain, but was outwitted by Ambani\u2019s firm. (Amazon accused the estranged Indian partner and Reliance of fraud in newspaper ads.)<\/p>\n<p>Amazon\u2019s recent spendings for growth in India has also made its local division\u2019s prospects of turning a profit \u201celusive,\u201d Bernstein report added.<\/p>\n<p>The e-commerce group didn\u2019t immediately respond to a request for comment Tuesday evening.<\/p>\n<p>\u201cAmazon has struggled to scale volumes in higher-margin categories such as fashion and BPC (beauty and personal care), while the inability to operate a 1P model (inventory led) has limited the availability of private labels vs. competition which further pressures margins. Amazon\u2019s management attrition has also increased recently, potentially signaling difficulties achieving desired scale,\u201d said Bernstein, whose reports are highly influential and widely cited.<\/p>\n<p>Amazon, like Walmart\u2019s Flipkart, operates a marketplace business in India due to local regulatory requirements. It\u2019s facing a wide range of other regulatory pushback in the South Asian market. Marketplaces cannot have a controlling stake in sellers on their platform. Amazon and Flipkart have reduced their stakes in their largest sellers. Amazon had a controlling stake in Cloudtail and Appario but has reduced it to 24%.<\/p>\n<p>A single seller cannot have more than a 25% share on a foreign-owned online marketplace. No e-commerce marketplace platform can mandate a seller\/brand to sell exclusively on the platform. \u201cIt has also clamped down on deep discounts,\u201d the report adds. Additionally, a new guideline proposed by India\u2019s central bank, if enforced, will impact Amazon\u2019s buy now, pay later offering, the report added.<\/p>\n<div id=\"attachment_2380969\" style=\"width: 1010px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" aria-describedby=\"caption-attachment-2380969\" loading=\"lazy\" class=\"wp-image-2380969 size-full\" src=\"https:\/\/www.ghanamma.com\/gp\/wp-content\/uploads\/2022\/08\/1661930628_820_amazon-india-regulation.jpg\" alt=\"\" width=\"1000\" height=\"439\"\/><\/p>\n<p id=\"caption-attachment-2380969\" class=\"wp-caption-text\"><strong>Image Credits:<\/strong> Sanford C. Bernstein<\/p>\n<\/div>\n<p>Other takeaways from the report:<\/p>\n<ul>\n<li>Amazon is less competitive in grocery and beauty and personal care categories.<\/li>\n<li>Amazon\u2019s India Prime membership offering is much the same as in the U.S. in terms of entertainment availability, but its logistics network size pales in comparison (13 m sq. ft. vs. 375 m sq. ft.) limiting SKUs available for half-day delivery.<\/li>\n<li>Amazon missing out in terms of engagement metrics and download share. Flipkart was the leader during the festival season last year, capturing a share of 62% while Amazon had a share of 27%.<br \/><img decoding=\"async\" loading=\"lazy\" class=\"wp-image-2380970 size-full aligncenter\" style=\"font-size: 1rem; letter-spacing: -0.1px;\" src=\"https:\/\/www.ghanamma.com\/gp\/wp-content\/uploads\/2022\/08\/1661930628_747_amazon-india-flipkart.jpg\" alt=\"\" width=\"1000\" height=\"299\"\/><strong>Image Credits:<\/strong> Sanford C. Bernstein<\/li>\n<li>\n<div id=\"attachment_2380972\" style=\"width: 1010px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" aria-describedby=\"caption-attachment-2380972\" loading=\"lazy\" class=\"wp-image-2380972 size-full\" src=\"https:\/\/www.ghanamma.com\/gp\/wp-content\/uploads\/2022\/08\/1661930628_453_e-commerce-india-benchmark.jpg\" alt=\"\" width=\"1000\" height=\"543\"\/><\/p>\n<p id=\"caption-attachment-2380972\" class=\"wp-caption-text\"><strong>Image Credits:<\/strong> Sanford C. Bernstein<\/p>\n<\/div>\n<\/li>\n<\/ul>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Amazon is lagging its chief rival Flipkart in India on several key metrics and struggling to make inroads in smaller Indian cities and towns, according to a scathing report by investment firm Sanford C. Bernstein. The American e-commerce giant\u2019s 2021 gross merchandise value in the country, where it has deployed over $6.5 billion, stood between [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1195320,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[],"class_list":["post-1195319","post","type-post","status-publish","format-standard","has-post-thumbnail","category-celebrity-gossip"],"_links":{"self":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1195319","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/comments?post=1195319"}],"version-history":[{"count":0,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1195319\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/media?parent=1195319"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/categories?post=1195319"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/tags?post=1195319"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}