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A Closer Look at Amazon’s Fastest Growing Market

Amazon India

Amazon Inc. (NASDAQ:AMZN) launched its Indian arm in June 2013 and has seen tremendous growth since then, becoming the only foreign e-commerce retailer to carve out a leading position in India’s hyper growth e-commerce industry. With an e-commerce market size that is expected to exceed US $100 billion by 2020, India is set to be a major growth driver for the company, even as its U.S. and U.K. markets mature. Amazon expects India to be its largest overseas market, and perhaps even the company’s fastest market to reach US $10 billion in terms of gross merchandise value.

Earlier this year, the company invested an additional US $250 million into India, as it ramps up its battle against homegrown rivals Flipkart and Snapdeal. It has invested over US $850 million into its Indian business over the past two years alone.

With a number of e-commerce sellers in the online marketplace, Amazon has been doing things differently to stand out. While most online sellers are using pricing and discounting as their main differentiators, Amazon is bringing in its global expertise and experience to gain market share. Amazon has now initiated next-morning delivery for late-night orders, and has commendable customer service and website navigation. The Amazon website and app were the most visited e-commerce platforms in India last year.

Amazon has been expanding frantically in India, spending heavily on marketing and logistics. The total revenues from Amazon India for 2015 jumped to US $154 million, with losses amounting to US $259 million. FY 2014’s corresponding sales and losses amounted to US $25 million and US $48 million, respectively. Amazon.in has over 30 million products listed in India, and added over 55,000 products per day in 2015. The number of sellers on the Amazon.in platform increased more than 250% in the last year. The company has nearly tripled its fulfillment capacity, with over 90% of Indian sellers using Amazon’s logistics and warehousing services. Currently Amazon has 21 warehouses in India so far, three of which were set up during 2015.

$AMZN trades with a P/B of ~19x with a P/E of ~52x. The stock has returned 46% in the last year. AMZN stock is currently trading at $552, which is just 21% below its 52-week high. It’s the world’s most valuable retailer, with a market capitalization value of $257 billion.

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