The last few months have been unlike any in the eight years the tech leviathan Amazon has been in India. And the pandemic is merely incidental.
Since May 2020, Amazon has entered three of the buzziest businesses in the country—food delivery, e-pharmacy, and edtech. Sure, Covid has helped these sectors surge, but Amazon has never been one for knee-jerk responses. Its US$1.6 trillion market cap is a testament to its founder Jeff Bezos’ unwavering belief in the exact opposite: thinking not just in years, but in decades.
By 2018—within five years of the launch of its e-commerce portal—Amazon controlled controlled SP Global Flipkart is No. 1 in India but faces formidable foe in Amazon, say experts Read more almost as much of the Indian e-commerce market as its arch-rival Flipkart, which was founded in 2007. Simply put, Amazon showed that Flipkart wasn’t the Amazon of India. Amazon India had arrived.
This was while the government was tightening the screws screws Mint What new FDI guidelines mean for the e-commerce ecosystem Read more on foreign-owned e-commerce marketplaces, and nimble, well-funded startups in payments, food delivery, e-grocery, and edtech were walking away with a larger share of the customer’s wallet.
Amazon saw that e-commerce wouldn’t be enough.
Peripheral businesses were not merely diversification opportunities but a strategic imperative to sustain the insatiable beast that is Amazon. If Amazon thought it had time on its hands, Covid put paid to that notion. Food delivery and edtech were suddenly on steroids, and the incumbents in the respective businesses—including Zomato and Byju’s, respectively—only grew stronger. They had no paucity of investor love as their valuations soared.
Making matters worse was the 800-pound gorilla hungry for a large chunk of the Indian e-commerce pie. In May, billionaire Mukesh Ambani-owned Reliance Industries, the country’s most valuable publicly listed company, rolled out its e-commerce service, JioMart, in 200 cities. In a matter of months, while the country was under a lockdown, Reliance Industries raised over US$26 billion in its digital services and retail businesses.
For Amazon, the time to deliberate over its next steps was long gone. To protect its turf in the future, it had to act now. This led to the launches of Amazon Food and Amazon Pharmacy—both of which are still limited to the southern city of Bengaluru—and Amazon Academy—a test-preparation offering that is currently in beta.
But these aren’t businesses where success comes easy. “Wherever a category has nuances or customisations, the Amazon playbook breaks down,” says the co-founder of an e-pharmacy startup. They requested anonymity since they did not want to be seen publicly commenting on a competitor.
But if Amazon’s past is any indication, it will be in no hurry to make it work.