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Withdraw from China and bet on India, Amazon made the right choice.

via:博客园     time:2019/4/23 16:32:19     readed:148


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Wen|Wang Xinxi

As early as April 18, Amazon has announced that it will no longer operate domestic e-commerce business, and Amazon's local e-commerce in China is abolished. After withdrawing from China, it is heavily betting on the Indian market. Earlier news showed that after the new e-commerce regulations in India, Amazon is still recruiting in India. On April 22, according to India's "The Navhind Times" report, after the electronic giant Amazon suffered a setback in China, it gave up and continued to compete with Jingdong Ali, but began to tilt more resources to India.

After the Amazon lost China, is the road to India good?

Amazon e-commerce exits from China is a reasonable and rational choice

In the Chinese market, Amazon basically has not had too many opportunities to survive. The e-commerce services provided by Amazon are far from the e-commerce giants such as Ali in terms of shopping experience, localized merchandise operations, product categories, logistics, and other new retail layouts. Amazon's brand label in the Chinese market actually gives people the impression that it is a website that sells books, which is no different from Dangdang.

The industry knows that Amazon's defeat in the Chinese market and the lack of localization are important reasons. However, in fact, foreign Internet giants have not been acclimatized in the past, and an important reason is that they have grasped the rules of the game in the Chinese market and the needs of market users. Unwilling but stubborn and unwilling to change, the Chinese market does not understand the decentralization. The principle of geek thinking pursued by the US Internet and its products copying its domestic principles has not changed. Therefore, the curse of the defeat in the Chinese market has never been broken.

In the global market, the volume of Ali and Amazon is in the same position as the market. In the Chinese market, the gap between the strength and volume of China's local e-commerce companies such as Amazon and Ali is too large.

Amazon is not unwilling to put a lot of money on the Chinese market, but has no hope of breaking through in the Chinese market. Its market share in the Chinese market from the peak of 15% to less than 1% today has fully explained the competition here. More than any other market in the world, nowadays, in addition to Ali Jingdong, many social and e-commerce companies have also played a lot, and Amazon has become increasingly marginalized in the Chinese market.

Amazon knows that even in the Chinese market, it is too late to change the thinking and playing style to make local transformation and heavy money response. At the current time, the input-output ratio will not be too good, because China’s e-commerce market structure Already basically solidified, users' shopping minds and habits have been finalized. Instead of struggling in a relatively saturated market, it is better to bet on the Indian market and to stabilize the market in the Indian market with a strong smartphone base and growth potential. From this perspective, It is a reasonable and rational choice for Amazon e-commerce to withdraw from China.

The Indian market is a potential growth garden for Amazon

In the Indian market, although there is a local e-commerce Flipkart, it is still not a climate. Compared with the giants such as Ali in the Chinese market, Flipkart is not enough. The chance of Amazon going to India is far greater than staying in the Chinese market.

India is a poor and large country, smartphone users are growing rapidly, the e-commerce ecology is still in the development stage, and the giants are lacking, the market population is huge, and the 3G/4G users in India are experiencing an outbreak. According to Cisco Issue 13 According to the Visual Network Index (VNI) report, by 2022, Indian smartphone users will reach 829 million, accounting for 60% of the total domestic population.


According to market research firm eMarketer, the size of the Indian e-commerce market is expected to grow more than double to $72 billion in 2020, based on $32.7 billion last year. According to the Indian Brand Assets Foundation, by 2034, India may surpass the United States to become the world's second largest e-commerce market. It can be said that Amazon chose to withdraw from China at this time, and it is a good choice to bet on India.

Amazon's competitive environment in India is far less than that of China's local e-commerce. Domestic Ali Jingdong Tencent Xiaomi and others have seen the opportunity here. They also laid chess pieces in India. Lei Junshun invested in Meesho for capital and entered the Indian social e-commerce market. Alibaba invested in India's largest mobile payment platform Paytm, Tencent also invested in India's largest e-commerce Flipkart, previously reported that Jingdong also plans to invest in India's B2B logistics platform Shadowfax, etc., so Amazon rushed out of the Chinese market bet India, but In the Indian market, it is still inevitable to confront old rivals.

But in general, Amazon's old rivals in the Chinese market are still in the investment layout stage in the Indian market, and Amazon's layout in the Indian market is quite complete, and it holds the indirect equity of the Indian wholesale group Cloudtail, with Box8, Faasos. ,CaféCoffeeDay,FreshMenu have established a food ordering partnership. In general, Amazon has a number of layouts and investments in the online retail, digital wallet, local content, food delivery business, local retailers and other fields in the Indian market, plus Amazon in the international The experience of market operation and layout and the strength of the platform of globalization, the odds are still large.

And the e-commerce in the Indian market is a huge incremental market. The Internet penetration, growth rate, competitive landscape, infrastructure (clearance, logistics, payment, traffic ecology) in the Indian market are at an early stage, while the Chinese market is The needle can't be inserted.

At present, Flipkart's market share in India is temporarily ranked first, but Wal-Mart won the controlling stake in Flipkart in 2018. Amazon's current market share is second, but Amazon still has the ability and hope to replace it. According to the latest report from Barclays Bank of the United Kingdom, as of March 31, 2018, Flipkart's revenue for the fiscal year was $3.8 billion. (Excluding subsidiaries Myntra and Jabong), about 19% higher than Amazon's $3.2 billion.

But Amazon India's GMV is much higher than Flipkart. According to Barclays Bank's report, Amazon India's GMV in FY18 was $7.5 billion, 20% higher than Flipkart's $6.2 billion. From the data point of view, the gap between Amazon and Flipkart in the Indian market is not too big. In general, it is actually in a similar trend.


Amazon has invested about $5 billion in India, and it is said to plan to invest another $2 billion. From the current point of view, Amazon also plans to acquire a 9.5% stake in Future Retail, a retail retail chain in India, while Future Retail has more than 1,000 stores. With a global supply chain and logistics system, and a blessing of Prime members and Amazon payments, Amazon's aggressive presence in the Indian market is more or more than Flipkart, because Flipkart is 6 years ahead of Amazon. Development, and Flipkart has now become a Wal-Mart company. According to Barclays' report, the growth rate between them is 82% and 47% respectively. Amazon is the biggest e-commerce position in India or time.

Once Amazon has won the first place in the Indian market, it is highly likely to sit on the monopoly and monopolize the e-commerce market in the Indian market. Therefore, in the current key time node to fully bet on India, it can be seen that Bezos's prediction of the trend is quite accurate, and the ambition to control the Indian market is evident.

Therefore, instead of struggling in the Chinese market, Amazon is better off betting on the Indian market. The offline retail environment in the Indian market is poor, which creates opportunities for the birth of the Indian e-commerce market. Currently, about 85% of Indians live in small towns, shopping malls or chain stores are missing and unevenly distributed, and offline shopping experience tends to fall. The rapid leap forward in online shopping, the popularity of mobile shopping in India is a matter of time.

Earlier, some people in the industry made a statistics, showing that Amazon's US market sales are about the same as the overall market size of the five European countries, and the Japanese market ranked third. The Indian market is expected to be 1/7 of the US market, although it is smaller than the European and Japanese markets, but 1.7 times larger than the Canadian market! The Indian market is currently the fourth largest market after the US, Europe, and Japan, but if it is operated properly Amazon's sales in the Indian market should be less difficult than Japan's.

At the level of localization, Amazon’s play in the Indian market is more attentive.

We see that Amazon's operations in the Indian market are more attentive than the Chinese market. First of all, from the perspective of payment methods, India's cash on delivery method accounts for 57% of the entire online sales payment method, and will still dominate the next few years, and one of Amazon's official instructions is " Cash on delivery will apply to all Amazon FBA shipments & quot;, and payment cooperation with Haptik, BookMyShow and Niki.ai.

Second, from the current national situation in India, the short-term growth is in the purchasing power of Indian consumers. In the purchasing power, the Indian market is too far away from the US, Europe and Japan. The e-commerce retail is laid out in the Indian market, and the price advantage has very significant competition. force. Of course, Amazon has also seen this, so in the Indian market, Amazon's discounts and offers on its retail platform are quite large. However, it has also encountered difficulties at the regulatory level.

If Amazon is at risk in India, the biggest risk may be the tax, regulatory and policy risks in the Indian market, but Amazon is also trying to match it as carefully as possible.

At the end of December last year, India amended the Foreign Direct Investment (FDI) regulations in the field of e-commerce, which came into effect on February 1. The new rules prohibit the sale of products through suppliers with equity, and they are also prohibited from reaching an agreement with the sellers, offering special discounts, reaching exclusive transactions, and selling products on their own platforms. And Amazon faces strong opposition from regulators in India because of the large discounts on its retail platform.

Amazon's new market rules are quite stable. First, a large number of products were removed from its Indian website. A large number of products sold by sellers such as Cloudtail, which has an indirect shareholding in Amazon, are no longer available on the website. At the same time, Amazon quickly adjusted its strategy and sold a majority stake in its leading investment partner, Cloudtail, in India, thereby resuming thousands of off-the-shelf products at the Indian site, while at the same time starting to sell products from local merchants. With a modest profit or zero profit to operate, the market share priority strategy is stable and stable, and is ready to launch more than 100 kiosk direct sales of electronic products in India, to promote the online and offline integration layout.

Of course, due to the payment, logistics and tariffs in the Indian market, the cost of product shipments is higher. This is also the risk of Amazon India. The poor business environment in India is known globally. India has habitually raised taxes to protect it. Local manufacturers have become the pain of many multinational giants, and Apple has already fought here.

Since October 12, 2018, India has once again raised tariffs on some imported products, including electronic products such as mobile phones, speakers, smart watches, and non-essential items such as air conditioners, refrigerators, shoes, and speakers. This means that the cost of the sellers on the Amazon platform is higher, and Amazon has to pay a higher price for sellers, especially sellers such as the 3C category.

However, Amazon currently has released the policy dividends for sellers in the Indian market, including free monthly rent, free handling listing, and self-delivery to get shopping carts. From here, we can see that Amazon's e-commerce layout in the Indian market and The coping strategy is more than the heart of the Chinese market.

In addition, Amazon's vertically integrated business layout provides an advantage for its Indian market layout and growth. The regulatory risk in the Indian market is the biggest uncertainty, although India's latest policy has restrictions on the platform, but India The overall e-commerce dividend of the market still exists. Amazon's platform mass and international layout structure, as well as its brand awareness, logistics payment and other advantages, grabbed the pit in the Indian market, Amazon holds the best hand.

In summary, Amazon's policy adaptation to the Indian market and the user's habits and market response are far better than the Chinese market. In addition, various dividends and market advantages exist. Amazon withdraws from China and bets on India. In fact, it has made The choice of right.

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