Amazon.com, Inc. (AMZN) seeks growth wherever it can be found — we all know that. And curiously, it hasn’t been able to “hack” India yet.
That inability may be changing this year, though, as AMZN doubles down on e-tailing during the annual Indian celebration known as the Festival of Lights.
Analysts project that up to 25% of Indian e-commerce revenues could come in the first nine days of the month-long festival alone, according to Reuters. And the lengths to which AMZN is willing to go to capture customers in the country of 1.2 billion are, well, somewhat extreme.
Why Amazon Needs India
Outside of the U.S., AMZN is adding the most new customers in India, making the country a vital market for Amazon’s international growth ambitions. About 38% of Amazon’s revenue in 2014 came from abroad — but AMZN would like to see that number increase.
Embracing the Festival of Lights, therefore, is the logical thing to do. Local rivals like Flipkart and Snapdeal are standing in the way of Amazon’s market dominance, and given the fact that Alibaba Group Holding Ltd (BABA) swooped in and crushed AMZN’s move into China, the company is being especially careful not to have that happen again.
How? Try a two-year, $2 billion spending spree in the country, and a sweepstakes that could dish out 35 ounces of gold per day for five consecutive days. At about $1,180 per ounce, that amounts to more than $200,000 all by itself.
Finally, these investments are starting to pay off. Per the Reuters report:
“According to website analytics firm Alexa, Amazon’s India website was now ranked the 6th most visited website locally and the 83rd most visited site globally as of Oct. 13, after rising 18 positions over the past three months. Flipkart is ranked higher at 5th locally and 79th globally, but it rose only 8 positions over the same period.”
AMZN is smart to play into the Indian culture, which reveres all things gold. Just ask McDonald’s (MCD), which famously does not offer its world-famous Quarter Pounder or Big Mac to India’s large population of Hindus, a religion that considers cows sacred and the consumption of beef sacrilegious.
International expansion is difficult. Walmart (WMT), which incidentally is going through some rather public issues of its own right now, had to pull out of Germany altogether in 2006 because the retailer just didn’t understand the culture well enough to succeed.
Although AMZN isn’t afraid to shut down initiatives if they don’t find traction, the company isn’t — and shouldn’t be — willing to abandon the Indian market. No, it would rather own the Indian market. While that may be a few years off, the inroads AMZN is making in India are nonetheless impressive … and they could take a huge step forward if Amazon “wins” the Festival of Lights this month.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
