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Amazon India posts 88% jump in gross sales volume for June quarter

LiveMint logoLiveMint 07-08-2017 Anirban Sen

Bengaluru: Amazon India (Amazon Seller Services Pvt. Ltd) said it posted an 88% jump in gross sales volume for the June quarter, outpacing the growth of the broader online retail market.

While the firm declined to share its sales numbers by value, two Amazon India executives said it reported an increase of nearly 60% by value in the June quarter, compared with a year earlier. The two executives requested anonymity.

“Amazon’s growth has been largely driven by both existing and new customers, with key market share gains in categories such as smartphones— where we have won key exclusive deals with brands such as Samsung, Moto and Redmi— and large appliances. We also continue to be leaders on key metrics such as website and mobile app visits, which is testament to our strong brand recall and loyalty among our customers. Over the past one year, most of our key initiatives—including the launch of Prime—has helped expand the e-commerce market in India, and we will continue to invest strongly to grow our business in India,” said an Amazon India spokeswoman.

Amazon India’s local rival Flipkart also said it grew at a fast clip during the same period.

Both Flipkart and Amazon numbers indicate the firms are growing faster than the e-commerce market, implying that they are taking a large market share from rivals such as Snapdeal, which has seen sales collapse due to a funding crunch.

“The online retail market continues to grow, but at a slower pace than was previously expected. There was a temporary break in growth rates last year, due to demonetization—without that, the market was growing at a good pace and had gathered momentum. What has also happened is that discounting has come down over the past few quarters—so, now you will see more realistic growth rates from the market leaders,” said Harish H.V., partner at Grant Thornton.

Flipkart and Amazon’s latest growth rate numbers also indicate that both rivals remain neck-and-neck in the overall battle for dominance. Mint reported on 26 July that while Flipkart continues to have a slight lead over Amazon, the latter is keeping pace with its local rival.

Over the past four years, Amazon has invested aggressively in India, committing to spend $5 billion to grow its business in the country. In June, Mint reported that Amazon had invested an additional Rs1,680 crore in its Indian unit as part of its commitment to invest $5 billion to expand its local business.

Amazon has been spending money on building massive warehouses, a large logistics unit, marketing, discounts and on increasing product assortment in India. These efforts have translated into a significant lead in key metrics such as app downloads, desktop visits and mobile website visits. According to data from market intelligence firm SimilarWeb, which tracks website traffic, Amazon India’s desktop visits stood at 276 million for the quarter ended 30 June, compared with 167.6 million for Flipkart. For its mobile website, Amazon India recorded 311 million visits during the June quarter, compared with 157 million for Flipkart, according to SimilarWeb.

The battle between Flipkart and Amazon is expected to be much more closely fought this year compared with most of last year, when it looked like the world’s largest online retailer was running away with the e-commerce market, according to several experts tracking both companies.

“Both Flipkart and Amazon should continue to do well in the near term, but for either of them to pull away and open up a massive lead over the other, one of them has to make a huge mistake or goof-up. Otherwise, this should be a long-drawn-out battle,” Harish of Grant Thornton said.

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