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INDIA-ECONOMY-INTERNET-RETAIL-AMAZON
Amazon bets big on India with mega-office
HYDERABAD, India, Sept 11, 2019 (BSS/AFP) – With 49 elevators moving a
floor per second and zumba classes for its more than 15,000 employees,
Amazon’s new Indian headquarters, its biggest building globally, matches its
ambitions in a vast but challenging market.
The US retail giant launched its first site in the South Asian nation of
1.3 billion people in 2013 and is locked in a fierce battle with Walmart,
which bought a 77-percent share in local e-commerce behemoth Flipkart for $16
billion last year.
“For Amazon, India is a very important geography,” the firm’s human
resources director for India and the Middle East, Deepti Varma, told AFP at
the gleaming new 86-metre (282-feet) tall office building in the southern
tech hub of Hyderabad.
While the prospects of success in the vast nation are tantalising, the
risks are also high, with Amazon and Flipkart incurring big losses as they
expand and attempt to tap into new markets in Asia’s third-largest economy.
Both firms will also face fierce competition from Indian conglomerate
Reliance Industries — helmed by Asia’s richest man, Mukesh Ambani — which
is preparing to go up against the two US companies with its own e-commerce
platform.
Bureaucratic hurdles present further challenges.
New e-commerce rules that came into force in February banned companies
like Amazon from selling products from firms in which they have a stake. They
are also forbidden from entering into exclusive deals with sellers.
The regulations were brought in after brick-and-mortar retailers
complained the e-tailers were unfairly selling products at discount prices.
“Going forward, the challenges are more around regulation and how to
navigate the policy and regulatory environment,” Ankur Bisen of Delhi-based
consulting firm Technopak told AFP.
“We have seen how some of the policy announcements have got them off-
guard.”
Amazon has already earmarked $5 billion in investment funds for India,
where one in three people use the internet — a figure forecast to swell by
300 million by 2020 mainly due to growing smartphone use.
India’s e-commerce sales are expected to triple between now and 2022, when
they are likely to pass the $100 billion mark, according to recent research
by industry body NASSCOM and PricewaterhouseCoopers.
Walmart, the world’s biggest retailer, said in May after reporting its
first-quarter earnings that despite losses at Flipkart, “we continue to
believe is a very sound long-term investment in a compelling market”.
India is also a major source of employment for Amazon’s global operations
with some 62,000 full-time staff and 155,000 contract employees.
Bisen said the Hyderabad campus “is a signal to the government that ‘we
are increasing our base in India and we are making sure there is a lot of
India that is built into Amazon’s global story'”.
BSS/AFP/HR/1100