Amazon.com, Inc. (NASDAQ:AMZN) recently announced that it will be investing $2 billion in India over the course of the next few years. This investment by Amazon.com, Inc. (NASDAQ:AMZN) is making some analysts skeptical owing to the fact that India’s e-commerce market is a fraction of the size of that of the U.S. or even China. India’s own homegrown e-commerce start-up Flipkart, which is also the current dominant player in the Indian e-commerce market also recently raised over $1 billion in funding that it is going to invest in its operation. This might pose a serious threat to the plans Amazon.com, Inc. (NASDAQ:AMZN) has for growing its scale in India.
Bloomberg’s Jon Erlichman and Cory Johnson spoke on Bloomberg with Forrester Research’s Sucharita Mulpuru on whether the $2 billion investment by Amazon.com, Inc. (NASDAQ:AMZN) makes sense.
“Well, I think that it is absolutely a bubble right now. The Indian e-commerce market is tiny, it is smaller than even a number of sectors in the United States, with probably no more than $5 billion total, kind of when you translate the rupees into U.S. Dollars and a $2 billion investment added to another billion dollars from Flipkart seems like it’s a lot of money flowing into a prize that isn’t really that big,” Mulpuru said.
Mulpuru stated that she questions the sanity of Amazon.com, Inc. (NASDAQ:AMZN) in investing so much money in the Indian e-commerce segment. She is also interested in seeing how Amazon.com, Inc. (NASDAQ:AMZN) invests the money, if it would be spent on logistics, acquiring other companies, in influencing the government officials or any other way.
“China also has a billion people and China is much, much further along in e-commerce. It is the market that is nearly $300 billion from the e-commerce standpoint alone versus India, where […] even the level of average income of the average Chinese middle class citizen versus the average Indian middle class citizen huge huge gaps and delta […],” Mulpuru added.