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India Is the New E-Commerce Battle Ground, Business and Industry Trends Analysis

Of India’s 1.4 billion people, roughly one-half live in rural areas with little if any access to traditional retailers.  With the rollout of 4G wireless service in much of the country, those millions of shoppers are front and center for marketing efforts by the world’s e-tailers.  This market poses unique challenges, since many of these potential customers don’t have credit cards or delivery addresses and are new to online shopping.  Some don’t have smartphones.  eMarketer estimated that retail ecommerce revenue in India could rise from the 2020 level of $55.35 billion to reach $67.53 billion in 2021 and more than $80 billion in 2022.  There is clearly room for significant additional growth.
Amazon bet heavily on the explosive growth potential in India, where it began operations in 2014.  To win over customers, Amazon enabled motorbike delivery centers around the country, with riders who understand confusing streets and arcane addresses and offers customers the ability to pay in cash when items are delivered.
The company redesigned its shopping app in India.  It offers tips in Hindi on how to find products (after humans translated descriptions of thousands of items, machine learning is now doing the Hindi translation, with more languages to follow), no email address is required to establish an account (just a phone number) and customers can pay by cash on delivery or using the Amazon Pay digital wallet (no credit cards or bank accounts required). 
Amazon is attempting to overcome the fact that many poorly-educated rural consumers do not know how to type, don’t understand how to conduct an effective online search, and often are unable to read.  Amazon works with small, local stores that it refers to as Easy Stores, with well-trained storeowners available to assist new consumers in online buying.  The store owners provide online shopping expertise that many consumers still lack, accept the payments and allow the consumers to pick up the packages at the stores upon arrival.
U.S.-based retail giant Walmart acquired India’s Flipkart in 2018.  Flipkart is India’s largest ecommerce firm.  The site offers guaranteed same-day delivery in India’s largest cities.  In July 2020, Flipkart Wholesale, a digital marketplace for small mom-and-pop businesses, was launched.
Together, Walmart and Amazon share about $20 billion in annual online sales per year, according to a report from AllianceBernstein.  The firm estimates that these sales account for approximately 60% of India’s total online sales.  However, e-commerce accounts for only 5% of total retail sales in India, compared to the 14% global average.  In-person shopping continues to be the norm.
While U.S.-based firms Walmart and Amazon were making massive investments in Indian ecommerce in an effort to dominate massive market share, the Indian government stepped in to make their strategies much more difficult.  Government leaders noted how China had encouraged the growth of highly innovative local ecommerce firms (including Alibaba and by making it difficult for foreign-owned companies to participate in the market.  Effective February 1, 2019, foreign-owned firms are prohibited from entering into exclusive agreements for the online sale of other companies’ products.  The new rules also cracked down on practices whereby ecommerce firms were shifting merchandise distribution to networks of wholesale distributors that they controlled, thereby circumventing rules intended to control growth of foreign companies.  (Rules prohibited foreign firms selling multiple brands from holding their own inventory or shipping merchandise directly to consumers.)  India hopes to protect the interests of local storeowners in this manner, while fostering the growth of its own domestic online platforms.  Adding further weight to Amazon’s and Walmart’s problems, the Competition Commission of India opened a formal antitrust investigation of both Amazon and Flipkart in early 2020 that was ongoing as of early 2023.  The long-term effect on Walmart’s Flipkart and Amazon remains to be seen.
Meanwhile, domestic investment and innovation is growing.  Giant India-based conglomerate Tata Group offers its own ecommerce platform called Tata CLiQ.  Another major Indian firm, Reliance Industries (which spent $35 billion to create India’s first all-4G wireless network in 2018), announced its own ecommerce platform called Jio.  Startup Meesho enables users to sell items to friends on WhatsApp, Facebook and Instagram (Meta Platforms is a Meesho investor).  In late 2022, the Indian government launched an e-commerce aggregator that allows users to search across multiple platforms (including Amazon and Meesho) for price comparisons and purchases.  Delivery will continue to be one of the biggest competitive battles in India’s rapidly growing ecommerce sector.  

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