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Amazon's (AMZN) Growing Seller Base to Boost Its India Reach

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Amazon (AMZN - Free Report) is firing on all cylinders in India’s e-commerce market on the back of its expanding seller base, driven by its robust programs focused on uplifting local shops, small offline stores, and small and medium businesses (SMBs).

This is evident from the company’s latest announcement regarding the number of sellers on amazon.in. Notably, the number has now exceeded the mark of 10 lakh, which stood at 100 at the time of the commencement of Amazon’s e-commerce business in India.

The sellers include mostly SMBs, local stores, women entrepreneurs, artisans and start-ups.

More precisely, the company has witnessed the joining of more than 4.5 lakh sellers since January 2020, among which there were more than 1 lakh local offline stores.

We believe that the increasing number of sellers on Amazon will continue helping it bolster its product options and offerings, which, in turn, will aid it in delivering enhanced shopping experiences to customers.

This will likely accelerate the shopping rate and sales on the company’s e-commerce platform. Moreover, expanding seller base as well as increasing customer engagement will help Amazon capitalize on the growth prospects present in the e-commerce market in India.

Per the report from India Brand Equity Foundation, the particular market is expected to reach $111.4 billion by 2025 and $350 billion by 2030.

Amazon.com, Inc. Price and Consensus

 

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

Amazon’s Strong Initiatives

Amazon’s deepening focus toward bringing local sellers as well as SMBs online in India by providing them strong e-commerce infrastructure and delivery network via its seller-focused programs remains the key catalyst behind its solid seller momentum.

The strengthening momentum of the company’s ‘Local Shops on Amazon’ program, which helps businesses adopt the e-commerce technology, remains a major positive. The program allows sellers to expand their customer base beyond their offline capacity.

Recently, the number of offline retailers and neighborhood stores from Maharashtra, who registered as sellers on this particular program, crossed the 11,000 mark.

The increasing number of these sellers on Amazon will help it reach out to customers seamlessly in India, where a chunk of its massive population depends on local shops for essentials.

Moreover, Amazon has pledged to bring 1 million local offline retailers in the country online via Local Shops on Amazon program by 2025.

Apart from the program, the e-commerce giant’s $1-billion investment announcement remains noteworthy. With the investment, it aims to build digital centers in 100 cities and villages of India. The proposed digital centers will likely help more than 10 million SMBs come online.

The digital centers are brick-and-mortar resource centers, with the help of which the e-commerce giant encourages micro, small and medium enterprises (MSMEs) to adopt advanced technologies to go online by delivering knowledge, skills and support to the latter.

Recently, Amazon established its first MSME-focused digital center called ‘Digital Kendra’ in the country, located in Surat, Gujarat.

In addition to these, the company is witnessing growing traction across its ‘Amazon Easy’ and ‘I Have Space’ programs, which are again focused on helping local shops expand their reach.

The increasing adoption of Amazon’s Seller App in the country remains another positive. At present, the app is being used by more than 50% of sellers on Amazon.in. Amazon’s Easy Ship and Tatkal are also gaining strong momentum among sellers.

Intensifying Competition

The above-mentioned endeavors will likely continue strengthening Amazon’s relationship with sellers in India, which, in turn, will bolster the seller base on Amazon.in.

However, Amazon is facing strong competition from the likes of Meta and Walmart (WMT - Free Report) , which are also deeply focused on the India retail space.

Meta acquired a 9.99% stake in Reliance Industries’ Jio Platforms last year, which remains a significant step. The WhatsApp-JioMart integration, which was long-awaited, finally took place this month.

The latest integration will help Meta expand its presence in the country’s online retail space. The integration enables shoppers with JioMart business accounts to shop on WhatsApp. Customer orders will be offloaded to the nearest store or fulfilled from a network of Reliance Retail’s stores.

Additionally, Walmart is enjoying a sturdy foothold in the India e-commerce market on the back of the solid customer momentum of Flipkart, which is the strongest peer of Amazon.

Flipkart’s strong initiatives focused on small-scale sellers like artisans, start-ups, weavers, and handicraft manufacturers like Covid insurance and Seller Protection Fund are helping it gain solid traction among sellers.

Also, the growing momentum across Walmart’s Supplier Development Program in India named Vriddhi remains noteworthy.

Zacks Rank & Stock to Consider

Currently, Amazon carries a Zacks Rank #5 (Strong Sell).

A better-ranked stock in the retail-wholesale sector is Target (TGT - Free Report) , which carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Target has gained 34% on a year-to-date basis. The long-term earnings growth rate for the TGT stock is currently projected at 14.4%.


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