Dive Brief:
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Amazon has decided to integrate its logistics network and AWS-powered small-business services in India with the Open Network for Digital Commerce, the e-commerce giant said in a press release Friday.
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The nonprofit ONDC “is an initiative aiming at promoting open networks for all aspects of exchange of goods and services over digital or electronic networks,” to the benefit of small merchants and consumers, according to a press release last year from the Indian government.
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The U.S. remains Amazon’s largest market, generating some 69% of revenue, and the rest of the world, including India, is its second largest, with about 14%, according to research from Roth MKM analysts. Last year, year-over-year revenue growth in the secondary market declined to 10%, from 38% in 2021, they said.
Dive Insight:
With Amazon’s disruption of U.S. retail arguably ebbing, emerging e-commerce markets like India’s may be especially enticing. It may seem surprising that Amazon would join an effort that aims to even the playing field in India’s still developing e-commerce landscape, presumably to the detriment of giants like Amazon and Walmart-owned Flipkart, but the area is increasingly important to Amazon’s long-term growth.
Speaking to analysts earlier this month, CEO Andy Jassy said that inflation and the war in Ukraine are complicating its prospects in Europe. By contrast, less established markets, while they require “a certain amount of fixed investment” of finances and time, are on a trajectory that resembles the company’s previous growth in North America, he said.
“If you look at countries like India and Brazil and the Middle East and Africa and Turkey, Mexico and Australia and a number of those types of countries, we like what we're seeing,” he said. “We think it's the right investment and believe we're going to have a large profitable international e-commerce business.”
In a statement, Manish Tiwary, country manager for the India consumer business at Amazon India, said the company’s goals are “closely aligned with ONDC’s objectives of digitally enabling small businesses, and providing convenience and choice to customers across the country.”
“We are excited about the opportunities to mobilise Amazon’s industry-leading infrastructure and technology, including logistics, and small business digitization tools, to help the ONDC accelerate its objectives,” Tiwary also said. “We remain committed to be being a catalyst for India’s digitization efforts throughout the economy.”
T. Koshy, ONDC’s CEO, hailed Amazon “taking its first step in coming in as the logistics partner in the ONDC network, which is a globally pioneering idea established with a view to democratise digital commerce in India.”
“We also hope that the buyer and seller platforms are onboarded as early as possible,” Koshy added.
