Amazon to invest $3B in India's fast delivery business
What's the story
Amazon will invest $3 billion in its fast delivery business in India by 2030. The investment will focus on expanding its network of small neighborhood warehouses, improving delivery efficiency. The company is concentrating on daily essentials rather than one-off purchases in this sector. However, current competitors have established loyalty among customers, making competition more challenging for Amazon.
Investment breakdown
Investment to boost quick commerce sector
Amazon plans to invest $1 billion in the quick commerce sector by 2027-end and another $2 billion by 2030, as per a Reuters report.
The company has not publicly disclosed these figures.
However, it has revealed that its quick commerce business has crossed $1 billion in annualized gross sales over the last three months, making it "the fastest-growing e-commerce business in Amazon India's history."
Growth strategy
Amazon faces tough competition in quick commerce space
The planned investment will be used to expand the existing Amazon Now service network with new small neighborhood warehouses for quicker deliveries.
Despite facing tough competition from domestic giants like Blinkit, Swiggy, and Zepto who control 77% of the market with over 4,500 stores, Amazon is optimistic about its growth prospects.
Walmart's Flipkart Minutes also has a significant presence in this space with more than 1,000 stores and an 11% market share.
Market goals
Plans to expand store network and improve inventory management
Currently, Amazon has a 6.2% market share in India's fast delivery business.
However, it plans to expand its footprint by targeting around 1,300 stores by April next year, up from around 750 now.
The company also plans to invest in strengthening inventory management software at stores, deploying AI tools for demand prediction, and expanding product selection.
Strategic focus
Focus on daily essentials and customer engagement strategies
Amazon's strategy for its fast delivery business is to focus on daily essentials.
The company does not plan to stock non-repeated items in quick commerce, which explains its decision not to stock iPhones like some of its competitors do.
To engage customers, Amazon Now service within the main app is offering a 20% cashback discount on select first orders above ₹499 ($5.20) and free delivery above ₹99 ($1) for select customers.