Amazon's Leadership Shifts in India as the Company Struggles to Survive in the Country
In recent years, Amazon has faced significant challenges and missed opportunities in India's rapidly evolving e-commerce market. Despite its substantial resources and scale, the company has struggled to capitalize on the burgeoning quick-commerce sector, a segment seeing significant growth. This is prepared by SSP.
Quick-commerce, offering instant deliveries of groceries, electronics, and other categories, is now making substantial inroads in the South Asian market. Leading quick-commerce firms — Zomato's Blinkit, Zepto, and Swiggy's Instamart — are on track to record total annual sales of about $4.5 billion, approximately a quarter of Amazon India's estimated $18 billion in sales according to brokerage firm JM Financial. These quick-commerce firms are "clearly taking share" from larger e-commerce companies, raising concerns about traditional giants' future strategies. Remarkably, Amazon has abstained from launching its own quick-commerce services, a move seen by many as a strategic oversight.
India's e-commerce sector grew only by 11% to 12% last year as per industry estimates, whereas the quick-commerce market expanded by more than 125%, highlighting a critical missed opportunity for Amazon. Moreover, with reports surfacing that the top 10 Indian cities are shifting their buying patterns towards quick-commerce, industry analysts question Amazon's response to this disruption. Even Walmart-owned Flipkart has begun addressing this market trend with its new offering, Flipkart Minutes. Yet, Amazon appears to remain aloof, choosing instead to mock the swift delivery trend in its advertisements. Goldman Sachs has assessed that Blinkit, acquired by Zomato for under $600 million in 2022, has grown to be valued at over $13 billion, underscoring the critical growth Amazon missed.
Leadership changes have further complicated Amazon's stance in the Indian market. Manish Tiwary, Amazon India's country head, recently resigned, planning to pursue a new role at another firm. Throughout his eight-and-a-half-year tenure, Tiwary played a pivotal role in developing Amazon India’s market presence. His departure comes at a time when the company is reported to have lost market share to competitors like Flipkart and Meesho, a social commerce platform. Despite the struggling e-commerce format in the smaller Tier 2 cities, executive turnover creates further questions about Amazon’s adaptations and long-term strategies in India.
Internally, sources suggest Amazon's shift under CEO Andy Jassy toward prioritizing its cloud services has hampered its e-commerce focus. Venture investments in AWS dominate future funding plans, significantly exceeding the company's spending on its e-commerce infrastructure. Additionally, issues such as slow merchant adoption, tighter regulatory restrictions since 2019, and recent operational closures in food delivery, wholesale distribution, and e-learning initiatives also present hurdles for Amazon. These factors, coupled with an unfavorable competitive landscape where local and other U.S. companies have scaled more strategically, amplify the firm’s struggles in India.
Despite efforts in growing its Amazon Fresh and QVC-style shopping segments, analysts remain skeptical about Amazon's agility to meet changing consumer dynamics efficiently. With tier 2 cities showing considerable growth in electronic accessory purchases largely through platforms like Meesho, Amazon’s significant invested capital in legacy infrastructure seems ill-fitted for rapid pivots.
Addressing this complex issue, Amazon spokesperson claimed that Amazon.in remains India's "most trusted online shopping destination" but dismissed reported sales data inaccuracies. However, the resounding need for strategic realignment within India's dynamic and nascent commercial framework remains imperative for retaining competitive relevance within this critical market.
