Original title: Bezos announced an investment of 1 billion dollars in India. His pressure comes not only from competitors, but also from the Indian government: Xiao Liu Dido He Jing
Abstract: Amazon and Flipkart have always competed for the top spot in the e-commerce sector in India, but whether Amazon can withstand protests from Indian traders and pass government investigations while maintaining its position in a highly competitive market is still questionable.
Bezos in New Delhi
On January 15, Amazon founder and CEO Jewel Bezos (Jewel Bezos) arrived in New Delhi to attend the first Indian SME summit held at Jawaharlal Nehru Stadium, which sparked quite a bit of controversy.
More than 3,000 small to medium traders, suppliers, and industry representatives working with Amazon participated in the conference. Bezos appeared on stage wearing an Indian-style top. At the conference, he promised to invest $1 billion in small and medium-sized enterprises to help them enter the global market.
He learned how Indians greet the audience with their hands folded, and won the approval of the participants with the simple opening phrase “I predict that the 21st century will be the century of India.”
Meanwhile, however, traders across India gathered in protest, calling for a boycott of Amazon. Some people labeled Bezos an “economic terrorist” in order to protect the territory from global economic forces, excessive discounts, and other misconduct.
Praveen Khandelwal (Praveen Khandelwal), secretary general of the Confederation of All India Traders (Confederation of All India Traders), representing India's 40,000 trade associations, said his organization is committed to opposing Amazon and anyone who exploits small traders.
Khandwar said, “The country's 70 million Indian traders will unite and fight hard.”
India's trade minister said on Thursday local time that Amazon's new investment has not brought any benefits to India. More and more Indian physical retailers accuse US industry giants such as Amazon and Walmart's Flipkart for violating Indian law, using their financial advantage to fight a price war, causing losses of billions of dollars to local merchants and discriminating against small merchants. But both companies have denied these allegations.
Minister of Commerce and Industry Piyushi Goyal (Piyushi Goyal) expressed doubts about Bezos' $1 billion commitment while attending the event in New Delhi.
He commented, “Maybe Amazon will actually invest $1 billion, but if the company loses $1 billion a year, they will have to make up for that $1 billion. As a result, the $1 billion they invested did not benefit India.”
The Competition Commission of India (Competition Commission of India) on Monday ordered an investigation into the alleged violation of competition law by Amazon and Flipkart, a subsidiary of Walmart, accusing the two companies of unfair trade practices and eccentric towards some sellers.
“Under the premise that buyers and sellers can trade freely, India allows foreign investment to enter the e-commerce market, but foreign market participants cannot own inventory or determine prices,” Piush said on Thursday. India has strict rules on foreign direct investment in multi-brand retail, and “any company that tries to use the e-commerce market to enter the multi-brand retail industry through improper means will be questioned and investigated.”
Bezos has kept his previous promises. Since the inception of Amazon India in 2013, he has invested 5.5 billion US dollars in the company, enabling it to achieve rapid growth over the past six years. At the time, Flipkart was the leader in the e-commerce market in India. Flipkart later received an investment of 16 billion US dollars from Walmart.
Amazon and Flipkart have always competed for the top spot in the e-commerce sector in India.
Both companies are continuously expanding their business scope, increasing suppliers, increasing delivery rates, and offering discounted sales activities to consumers. According to industry analysts, the 2019 holiday promotions of the two companies — Flipkart's “The Big Billion Days” (The Big Billion Days) and Amazon India's “Great Indian Festival” (Great Indian Festival) — reached 3 billion US dollars in just 6 days, an increase of 30% over the previous year.
In New Delhi, many small businesses attending the summit were both encouraged by the scope and scale of the first Indian SME summit and welcomed Amazon's increased capital investment. Bezos knows very well what the additional investment is for. “The $1 billion commitment will help small and medium businesses grow and export goods made in India to Amazon's global market. This initiative will leverage Amazon's global business to generate $10 billion in Indian exports by 2025.”
Amazon sees India's middle class growing and the Internet penetration rate is growing rapidly, and sees India as the future market. Unfortunately, the short-term profit situation is still uncertain: as of March 31, Amazon India's wholesale and marketing division announced financial losses of about 58 billion rupees, or about US$817 million.
Meanwhile, Amazon has also made other investments in the retail sector. In 2017, Amazon bought 5% of the shares in the Indian department store chain Shoppers Stop; in August 2019, it bought shares in the retail chain brand The Future Group. None of the above investments should be underestimated. India's retail industry is growing rapidly. It is estimated that by the end of 2020, the Indian retail market, currently worth 800 billion US dollars, will grow to 1 trillion US dollars. India's e-commerce market was worth around $45 billion in 2019, which is not too big, but is expected to grow significantly to $200 billion by 2026.
Whether Amazon can withstand protests from Indian traders and pass government investigations while maintaining its position in a highly competitive market remains to be seen.
However, Bezos had a full program during his visit. He took his children to fly kites, light holiday lanterns, talk about the growth of India's retail industry, and denied that he was an economic terrorist. He made it clear that starting in 2020, India's retail industry should be fully developed. (The content of this article is exclusive to the “Fashion Technology” channel of Titanium Media. It is co-produced by WWD International Fashion News and the Titanium Media content team. (Author | Mayu Saini, compiled by Xiao Liu Dido, Editor | He Jing)