While China remains a sore spot for Amazon, the e-commerce giant is ensuring that it does not leave any stone unturned in establishing a significant presence in India.
After committing an additional $3 billion investment in the region, the company is now looking to make its subsidiary “Junglee” a platform for individuals to buy and sell goods to each other (mostly second hand products), with Amazon managing the payment and delivery. Quikr and OLX are established players in this market in India.
However, Amazon’s strong delivery network and promise of an “Amazon like” experience should draw customers to this platform. We believe this initiative will broaden Amazon’s user base in India and give it a stronger foothold in the region. With India well positioned for strong e-commerce growth over the long term, we believe it can be a key region to drive Amazon’s revenues in future.
Used Goods Market Growing Rapidly In India
According to a study by Assocham, the used goods market in India, grew to nearly $19 billion in 2015, up from $10 billion in 2011. The potential market opportunity in this segment is pegged at $25 billion by 2020. The used goods market is bigger than the new goods in India, especially in automobiles and mobile phones. According to a research report by Greendust, for every 100 new cars sold in India, 120 used cars are sold.
Several consumers in India are willing to buy used goods from reliable platforms, especially those that provide end-to-end services, including payment and delivery. With its brand name and strong payment and delivery network, Amazon is well poised to capture a significant share of this market.
By entering this space, Amazon can also eventually enter the refurbished products space, which is also growing rapidly. Experts believe that products which are returned by e-commerce buyers can be sold as refurbished goods at higher margins.