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Focus on AMZN, WMT & More in India Despite Regulatory Woes

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With e-commerce increasingly becoming integral to our day-to-day lives, it has been gaining a significant momentum in the Indian retail market over the past few years. Notably, the number of online shoppers in the country has been rapidly rising, courtesy of the ongoing digitization.

Moreover, with change in consumer preferences and the growing proliferation of smartphone and internet usage, the adoption rate of e-commerce is being accelerated.

Per an India Brand Equity Foundation report, the Indian e-commerce market is expected to hit $200 billion by 2026. Further, revenues in this particular space are projected to reach $120 billion in 2020.

Given this upside potential, India is witnessing an influx of investments from major overseas e-commerce players, namely Amazon (AMZN - Free Report) , Walmart (WMT - Free Report) , eBay (EBAY - Free Report) and Alibaba (BABA - Free Report) despite antitrust regulations in the country getting rigid.

Notably, heavy discounts offered by online shopping platforms, especially Amazon and Walmart-backed Flipkart, are hurting small and medium businesses (SMB) of India.

Recently, Competition Commission of India (CCI) launched an anti-trust probe to look into the allegations made by brick-and-mortar retailers.

Nevertheless, both Amazon and Walmart are putting in strong efforts to support the interests of SMBs in the country.

Amazon’s Aggressive Stance

Amazon’s CEO Jeff Bezos recently made an announcement of $1-billion investment in India at the Smbhav summit in New Delhi. The latest investment will be an addition to $5.5-billion investments in India, pledged by the company since 2014.

Amazon Smbhav is the first-of-its kind mega summit in India that is focused on small and medium businesses (SMBs) of the country. The event has brought 3,000 SMBs together.

With the investment, the e-commerce giant aims at building digital centers across 100 Indian cities and villages. The company also strives to help SMBs leverage the ongoing digitization in India.

We believe, the proposed digital centers are likely to aid more than 10 million SMBs to come online, which in turn, will expand their customer exposure. Further, the latest move will benefit customers, who will easily access goods from these sellers online.

Moreover, it will assist Amazon in strengthening its e-commerce business in India by expanding its seller base and product offerings. Notably, there are 550K Indian sellers on the company’s e-commerce platform.

Apart from the SMB initiative, this Zacks Rank #3 (Hold) company recently entered into a long-term agreement with Future Retail that will authorize it as the official online sales channel for the latter’s retail stores. Notably, Future Retail owns and operates 1,500 stores across India.

Notably, Future Retail’s lifestyle food superstore Foodhall and most importantly, Big Bazaar, which is one of the largest department and grocery store chain of India, will be available online via Amazon India marketplace.

Hard to Ignore Walmart’s Efforts

Walmart made its major strategic move in Indian online retail space by acquiring a majority stake in Flipkart.

Further, the company recently unveiled a supplier development program in the country called Walmart Vriddhi Supplier Development Program, focusing on Indian medium and small enterprises (MSME).

Walmart attempts to train 50,000 MSMEs by establishing 25 institutes around manufacturing clusters across the country within the next five years with its latest endeavor. Importantly, the first one is likely to be set up in March this year.

Moreover, this program is expected to scale up these MSMEs up by expanding their customer reach and joining the global supply chains.

Currently, Walmart carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Walmart Inc. Revenue (TTM)

Walmart Inc. Revenue (TTM)

Walmart Inc. revenue-ttm | Walmart Inc. Quote

How Are eBay & Alibaba Placed?

We note that eBay and Alibaba are also pulling out all the stops to capitalize on the teeming prospects in the e-commerce space of India.

eBay re-entered the online retail space of India through its country-based website. Further, this Zacks #3 Ranked company acquired a 5.5% stake in Paytm Mall, which is gaining traction in the country.

eBay Inc. Revenue (TTM)

eBay Inc. Revenue (TTM)

eBay Inc. revenue-ttm | eBay Inc. Quote

Additionally, the #3 Ranked Alibaba led a funding round and invested $146 million in the Indian online grocer BigBasket. Moreover, this Chinese e-commerce giant is trying to strike plum deals with the Indian giant, Reliance.

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