India could become Amazon’s second largest market, analysts from Bank of America Merrill Lynch believe. Given Amazon CEO Jeff Bezos’ focus on the country, India, they feel, could see more investments — over the budgeted $5 billion — management focus and import of some best practices from the US.
“On our estimates India could potentially generate 21% of Amazon’s international GMV; $81 billion in GMV and $2.2 billion in operating profit by 2025. In our view, if other Indian e-com companies do not continuously innovate and receive timely adequate funding, then we see potential for Amazon to emerge as the No. 1 e-com platform in India,” the analysts wrote.
The brokerage also upped its estimates for e-commerce GMV in India by 7% to $62 billion in CY20 on the back of better-than-expected benefits from the Jio service launch and seventh pay panel estimates.
The near-24% increase in salaries, they say, would create an incremental spending of around $10.75 billion every year on salaries of 10 million employees. “This will result in an increase of disposable income in the hands of people, leading to increased consumption demand,” they observed. Besides, they opined the Jio launch is forcing other telcos to improve their networks and ushering in more cheap smartphones into the market. “Jio’s services will expand internet penetration faster than our earlier estimates, and lead to faster pickup of the e-commerce industry,” they wrote.