NEW DELHI — Amazon founder and chief executive officer Jeff Bezos found plenty of controversy as he flew into New Delhi for the first Smbhav meeting at the Jawaharlal Nehru Stadium.
This meeting of more than 3,000 small and large traders, suppliers and industry representatives who work with Amazon saw Bezos arrive with considerable charm, wearing an Indian jacket, and making a large promise: to invest $1 billion in small and medium enterprises, and helping them reach global markets.
“I predict that 21st century is going to be the Indian century,” he said, winning the audience with the simple line, and an Indian style greeting, with folded hands.
Meanwhile, traders all over India have been gathering in protest, calling for a boycott of Amazon. Some labeled him an “economic terrorist,” in an effort to protect their turf against what they see as global strong-arming, extensive and unfair discounts and other alleged malpractices.
Praveen Khandelwal, secretary general, Confederation of All India Traders, which represents 40,000 trade associations in India, said his organization was committed to oppose Amazon and anyone else who threatened to suck the blood of small traders.
“Seventy-million traders of India stands united to fight the battle tooth and nail,” Khandelwal said.
And union commerce and industry minister Piyush Goyal reacted sharply to Bezos $1 billion pledge at an event in New Delhi.
“They may have put in a billion dollars, but if they make a loss of a billion dollars every year, then jolly well will have to finance that billion dollar. So, it is not as if they are doing a favor to India when they invest a billion dollars,” Piyush Goyal said, referring to Amazon.
The minister’s statements came after the Competition Commission of India ordered a probe into alleged competition law violations by Amazon and Walmart Inc.’s Flipkart on Monday, accusing the companies of unfair trade practices, and giving preference to select sellers.
“India allows foreign investments in [an] e-commerce market place model and in this model buyers and sellers are free to trade, but the market place player cannot own the inventory, or they cannot determine prices,” the minister said on Thursday, noting that India had strict rules for foreign direct investment in multibrand retailing, and that “anybody who tries to use the e-commerce market place model to get into the multibrand retail space surreptitiously will have to be questioned and investigate.”
Bezos has kept his earlier commitments, having invested $5.5 billion in Amazon India since it was launched in 2013, making for fast growth in the last six years.
At that time Flipkart was the clear market leader.
Since then, Walmart invested $16 billion in Flipkart, and both Amazon and Flipkart have been racing ahead claiming top spot in the e-commerce segment in India.
Both companies have been growing their reach, adding suppliers, improving their edge on delivery, and offering discounted sales events to the delight of consumers. Their festive season sales — Flipkart’s The Big Billion Days, and Amazon India’s Great Indian Festival were estimated to have earned the two companies an approximate $3 billion of gross merchandise value during a six-day period in 2019, according to industry analysts, up 30 percent over the previous year.
Many small business players at the New Delhi event welcomed the idea of additional funding, along with the scale and size of this first Smbhav event. Bezos was clear about the uses of the additional investment. “The $1 billion commitment would be to help grow the small and medium businesses, to export the goods made in India across Amazon’s global markets. This initiative will use Amazon’s global footprint to create $10 billion in Indian exports by 2025,” he said.
It is clear that Amazon looks at India as a market for the future, with the growing middle class, and the fast-growing Internet penetration. But profits are still evasive: Amazon India’s wholesale and marketplace entities posted a loss of around 58 billion rupees, or $817 million, for the financial ended March 31.
Meanwhile, Amazon has also been making other ties in retail — buying 5 percent in department store chain Shoppers Stop in 2017, and a recent stake in retail chain the Future Group in August 2019. These ties are noteworthy as retail in India is growing fast, with the $800 billion Indian retail market expected to hit $1 trillion by the end of 2020. Although e-commerce is still modest, at an approximate $45 billion in 2019, it is expected to reach $200 billion by 2026.
Whether Amazon will be able to field the protests by traders across the country, and the government investigation as well as keep it’s positioning in this intensely competitive market remains to be seen.
But Bezos — who during his visit flew kites with children, lit ceremonial lamps, talked up retail growth in India and fought back against idea of being an economic terrorist — is making clear that he intends to work his way through the great Indian retail story in 2020, and beyond.