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Amazon's (AMZN) New MoUs Boost Expansion Strategy in India

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Amazon (AMZN - Free Report) continues to make concerted efforts to bolster its footprint in the booming e-commerce market of India.

This is evident from its latest signing of two memoranda of understanding (MoUs) with the government of Uttar Pradesh enterprise — Micro, Small & Medium Enterprises (MSMEs) and Export Promotion.
 
The company strives to support artisans, weavers, local stores and entrepreneurs of the Uttar Pradesh state in their process of digitization. On the back of the latest move, Amazon launched its first Digital Kendra of the state in Kanpur.

Digital Kendra is a MSME-focused digital center, which encourages MSMEs to adopt advanced technologies to go online by delivering knowledge, skills and support to them.

Amazon aims at boosting the volume of exports from the state through e-commerce. As part of the underlined MoUs, it will help MSMEs adopt e-commerce by training and onboarding them on its Global Selling program.

Also, the company will encourage these sellers to join its one district one product (ODOP) program.

All the above-mentioned initiatives will likely expand the customer reach of these MSMEs across India and the world, and increase the export volume of products made in India.

By bringing these sellers to Amazon.in, the e-commerce giant will be able to offer a variety of products from Uttar Pradesh to customers across India, which, in turn, will drive its customer momentum.

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

The latest move is in sync with Amazon’s deepening focus on bringing women entrepreneurs, local sellers and SMBs online in India by providing them with a strong e-commerce infrastructure and delivery network via its seller-focused programs. This remains the key catalyst behind its solid seller momentum.

Apart from the latest move, the company recently signed an MoU with a government of Manipur enterprise — Manipur Handloom & Handicrafts Development Corporation, with the support of which it unveiled Panthoibi Emporium on Amazon.in as part of its Amazon Karigar program. The company strives to support artisans and weavers of the Manipur state in adopting e-commerce

Further, the company launched a storefront on Amazon.in, focused on empowering women-owned small businesses. Notably, the storefront showcases several products offered by more than 800 women sellers as well as sellers associated with various organizations promoting women entrepreneurship.

The e-commerce giant unveiled the Smart Commerce initiative to support and accelerate the digitization process of local stores with its new initiative, thus, transforming them into ‘Digital Dukaans.’

The company is enjoying solid momentum across its ‘Local Shops on Amazon’ program, which helps businesses adopt the e-commerce technology. The program allows sellers to expand their customer base beyond their offline capacity.

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

Amazon has pledged to bring 1 million local offline retailers in the country online via the 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 growing number of exporters via Amazon’s export program called Global Selling remains a major positive. The program has become the key catalyst behind the expanding export volume of sellers on its online retail platform. Notably, the number has now exceeded the mark of one lakh, which is not only a huge achievement for the company but also beneficial to its wide range of customers.

To Conclude

The above-mentioned endeavors are expected to strengthen Amazon’s relationship with SMBs in India. This will continue to bolster the seller base on Amazon.in.

This, in turn, will expand product offerings on the company’s e-commerce platform, which will likely accelerate the shopping rate.

We believe that Amazon’s growing focus on its expansion in a booming market like India holds promise for its overall e-commerce business, which, in turn, is likely to instill investor optimism in the stock in the near term.

Notably, AMZN has lost 36.3% on a year-to-date basis.

According to India Brand Equity Foundation, the e-commerce market in India is anticipated to hit $111 billion by 2024, $188 billion by 2025, $200 billion by 2026 and $350 billion by 2030. In 2022, the market is expected to reach $74.8 billion.

Zacks Rank & Stocks to Consider

Currently, Amazon carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the retail-wholesale sector are AutoNation (AN - Free Report) , The Kroger (KR - Free Report) and Solo Brands (DTC - Free Report) . All three stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoNation has returned 15% over a year. The long-term earnings growth rate for AN stock is currently projected at 24.74%.

Kroger has gained 43.7% over a year. The long-term earnings growth rate for the KR stock is currently projected at 11.27%.

Solo Brands has lost 74.1% over a year. The long-term earnings growth rate for the DTC stock is currently projected at 16.74%.


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