Resilience to regulatory and market changes According to Investing.com

In its latest report Barclays (LON:) presents a detailed analysis of Amazon’s (NASDAQ:) performance in India, highlighting both challenges and growth opportunities. Despite a slowdown in some segments, Amazon India remains a significant player in the country’s growing e-commerce market.

According to Barclays, the overall e-commerce gross merchandise value (GMV) in India is growing at around 20%, with government estimates putting it at around $120 billion. Amazon has less than 30% of this market. However, tax returns for the fiscal year ending March 2023 show that Amazon India’s B2C revenue grew by a modest 3% year-on-year (YoY), a noticeable slowdown compared to the pandemic-impacted years.

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Amazon Web Services (AWS) continues to perform well in India, generating revenues of $1.6 billion with growth of 43% YoY, even after strong growth of 66% YoY in the previous financial year. On the other hand, Amazon Pay revenue grew just 5% YoY to $260 million, compared to 17% the previous year, indicating a loss of market share to other payment options.

Barclays estimates Amazon India’s FY23 GMV, excluding B2B transactions, at around $18 billion, with an overall GMV of around $21 billion considering all business segments. This represents a decline of 3-4% in USD, reflecting further reductions in wholesale activity following regulatory changes in 2019.

Amazon India accounts for 4.8% of Amazon’s international retail revenues, but also 11% of its international operating income losses. In the first calendar quarter of 2023, India generated $5.6 billion in revenue (up 1% YoY) and incurred $0.9 billion in pre-tax losses. Notably, Amazon significantly reduced its total international operating income losses, with a significant decline from -$7.7 billion to -$0.5 billion year-over-year, driven by cost-saving measures in mature international markets outside India. Barclays expects operating earnings in India to stabilize without major fluctuations in the future.

Government data suggests continued e-commerce growth in India of around 20% in 2024, in line with last year, potentially reaching just over $120 billion in GMV. Other estimates, such as the Google-Tamasek-Bain study, suggest a lower number, but Barclays relies on IBEF data in its global e-commerce industry model.

Per capita e-commerce spending in India is still much lower than in Western markets due to lower income levels, but the trend is improving. A recent study by Google (NASDAQ:) shows that B2C e-commerce GMV in India will grow at a compound annual growth rate (CAGR) of 26%, driven by a growing online customer base and rising per capita consumption. Improvements in digital infrastructure and growing digital-first habits among Tier 2 or higher populations are also contributing to this growth. However, challenges remain due to the low population density and diverse consumer profiles in these areas.

A Nielsen study commissioned by Amazon India shows that Amazon.in is the preferred shopping destination for 68% of consumers during the annual festive season. Over 78% of consumers trust online shopping and Amazon.in has been recognized as the most trusted and convenient online brand.

Overall, despite regulatory challenges and market slowdown, Amazon India is demonstrating resilience with strong market share and steady revenue streams in AWS. The company’s strategic focus on digital infrastructure and consumer trust continues to position it well in India’s evolving e-commerce landscape.

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