Brokerage firm expects the e-commerce market in India to grow at an annual rate of 30 percent to cross $130 billion by 2025
Even after making investments of $6.5 billion in India through the last eight years, profitability remains elusive for the e-commerce major in the country with negative EBITDA margins of 5-10 percent, according to a report by brokerage firm Bernstein.
The company also faces immense competitive pressure in the fast-growing categories like smartphones and apparel, a weaker value proposition in ‘new’ business areas like social commerce and quick commerce, limited traction in tier II and III cities, and an unfavourable regulatory environment for foreign retailers.
Smartphone have been the fastest growing but lower margin category for Amazon. The company is estimated to have a leading percent 45 market share in the category driven by strong brand relationships. In fashion, Flipkart (including Myntra) is estimated to be the dominant player with around 60 percent market share, while Amazon enjoys around 25-30 percent. AJio (part of Reliance Retail) is growing strongly with around 15 percent market share.
However, Amazon is falling behind on user engagement metrics like downloads and daily active users while Meesho is leading the charge on this front and Flipkart has seen traction in recent months with the launch of its social commerce app Shopsy, according to the report.
“We see strong traction in engagement metrics for new player Meesho targeting value end of e-commerce (focus on Tier-II and beyond markets) and long tail categories like fashion, home and accessories, and beauty and health products. Meesho is differentiating by not charging commissions,” it said.
Source:https://www.moneycontrol.com/news/business/profitability-remains-elusive-for-amazon-in-india-despite-6-5-billion-investment-bernstein-9115471.html