With its experience in operating businesses across multiple geographies and achieving profitability, Amazon is leveraging its expertise to develop a targeted playbook for India, where it is entering its second decade of existence. Manish Tiwary, Vice President and Country Manager of Amazon India’s consumer business, says the company recognises the investment-heavy nature of the e-commerce industry in its initial stages, but its ability to apply global learning to the unique dynamics of the country keeps it firmly on track towards profitability.
“Amazon has a lot of experience in e-commerce, has operated in a lot of countries and geographies, we have a playbook on how to drive sustainable growth. E-commerce is investment heavy at the beginning. There have been some ups and downs, but we are pretty much on the journey for achieving profitability per the playbook. We have been very careful about what we do. We always go customer backwards to make sure there is genuine customer delight. So, we are very patient stakeholders,” Tiwary said in an exclusive interaction with Business Today on the occasion of Amazon India’s 10th anniversary.
Amazon made its highly anticipated entry into the Indian market on June 5, 2013, marking a significant milestone in its global expansion strategy.
The Seattle-headquartered company achieved profitability in different countries at varying timelines. In the United States, it took seven years to achieve the first quarterly profit after its establishment in 1994, while the first full-year profit came only in 2003. While the precise profitability timeline for other major markets like the United Kingdom, Germany, Canada, and Japan are subject to variation and no official confirmation is available, they likely followed a similar trajectory to the US market.
Though Tiwary refrained from making direct comparisons between the Indian market and other locales, he emphasised that Amazon India’s journey aligns with the strategies implemented in other countries, with a clear plan in place to achieve profitability.
Amazon Seller Services, the operator of Amazon India marketplace, recorded a net loss of Rs 3,649 crore in FY22. The company’s consolidated loss amounted to Rs 6,339 crore during the fiscal.
“This concept is not true for Amazon that at some point you grow without looking at profit and at some point to just make profit. That is not how we operate… India is a unique and a diverse market. We’ve operated across so many countries, and the people running the business in India have a great deal of expertise in the country and the local nuances. The best thing to do, which is what we’ve done in India successfully, is to take the global learnings and dovetail them with the learnings from India, and we have a pretty rich expertise of both. We have dovetailed that to create a unique playbook for India,” he added.
India Pledge
During his 2022 visit to India, Amazon founder Jeff Bezos had pledged to invest an additional $1 billion in digitising small and medium businesses (SMBs) in the country, besides other commitments on job creation and export.
“In 2020, when Jeff visited, we made three pledges. We selected three areas where we could make a difference. One was digitisation. As a company that depends on technology, we said we would digitise 10 million small businesses by 2025. The second was employment. We said we would create 2 million incremental jobs directly or indirectly by 2025. And the third was to do $10 billion worth of export,” Tiwary said.
Since the progress on exports was promising, it doubled the initial target from $10 billion to $20 billion, and according to Tiwary, the company has already reached $5 billion. Today, Amazon helps Indian small businesses and manufacturers sell in close to 190 countries, the company said.
He said the company is making progress towards its digitisation target with the current count nearing 4.1 million. In terms of employment, the company has already achieved 1.1 million incremental jobs of the target of 2 million. Amazon is one of the largest private sector employers in India, employing around 110,000-115,000 individuals.
According to Tiwary, India remains an extremely attractive investment area for the company because of the strong economy, digital mindset, and abundant talent.
“India is one of the most promising countries. We are at a per capita of around $2,200. When the per capita incomes hits a certain point, the consumption pattern starts skyrocketing, which is exactly what happened in China. In the next two to three years, we will start hitting that level. Multiply it with the population and the age profile, and India would definitely be one of the most interesting and high potential countries for Amazon,” he said.
Tiwary said the retail giant’s primary focus for the next decade in India is to acquire the next 200 million customers and onboard the 15-18 million inventory points across the country.
“Where else in the world would you get the chance to address such a large market, which is doing so well and is not only innovating for India, but innovating for the world? Amazon is only 30 years old, it is a young company worldwide, and in India, we are just 10 years, so we have a lot of catching up to do,” he said.