Amazon’s retreat from China rolling back its e-commerce operations bolsters the case for the seattle-giant to increase its focus on India, its largest market outside of the United States.
The company will shut down its Chinese marketplace business while shifting its focus to offer mainland consumers, overseas products rather than goods from local sellers, according to a Bloomberg report.
This move not only signals Amazon’s struggle competing with Chinese e-commerce giants such as Alibaba and JD.com, but also underscores India as its important market -- a battleground to compete for dominant market leadership.
“Over decades, China's government has strategically enabled local companies to build unassailable dominant positions in the domestic market," said Devangshu Dutta, chief executive of consulting firm Third Eyesight. “Conversely, in India, no government has actually created conditions that favour the growth of world-dominating companies."
On the other hand, across the McMahon line, Amazon is facing a standoff with Walmart, which acquired 77% of Flipkart last year. The Arkansas-based retailer has stepped on the gas focusing more on the Indian e-commerce market that is expected to touch $200 billion mark by 2027, as per Morgan Stanley.
Earlier this week, Walmart CEO Doug McMillon paid a visit to the Flipkart office to discuss its roadmap to battle it out with competitor Amazon India.
Analysts say that Amazon stands a better chance to succeed in India since the e-commerce sector here is already dominated by two foreign-owned companies - Amazon and Flipkart - which, between them, are estimated to account for more than 80% of ecommerce market revenues.
However, some other analysts Mint spoke with say that Amazon’s retreat from China will not necessarily mean an increased focus on India.
“Amazon has been in the process of winding down in China for a while now -- they were not investing any resources in that country," said an analyst in the know of the matter. “So, this move does not mean it will divest resources from China to India."
Amazon has been making several capital infusions into its Indian entity over the years. Amazon India received ₹2,200 crore in December from its US parent entity, which was the fourth tranche of capital infusion. Founder Jeff Bezos had committed $5 billion to the India business in 2016.
