Amazon India has now become the fastest-growing online marketplace in India, as well as the website with the highest traffic in the country for both desktop and mobile versions. This is according to the company’s founder and CEO Jeff Bezos. In a letter addressed to shareholders that was released on 19 April, he quoted data collected by comScore – a market analytics company – and information from SimilarWeb, to back his claims of Amazon’s dominant position in the Asian country. He also pointed to data collected by App Annie that indicates that his company’s mobile shopping app was the most downloaded in India in 2017.
Jeff Bezos Announces Astounding Amazon Prime Subscription Figures
The letter adds that Amazon has managed to get over 100 million online shoppers to purchase subscriptions to its Prime service, which offers them two-day shipping free of charge in addition to a raft of other benefits, which help to maintain their loyalty to Amazon’s expanding retail empire.
It is the first time that Bezos has quantified the membership size of the popular Prime service in the annual letter that the CEO releases to shareholders. Before the stunning revelation, most analysts had been left to merely speculate on the number of people willing to fork out the $99 annual subscription price for Prime, which was launched as Amazon’s loyalty scheme more than a decade ago. The scope of the service’s success has come as a shock to even the most optimistic market watchers.
That being said, Amazon still has a way to go before it can officially lay claim to the title of the leader in digital subscriptions. That distinction still lies with Netflix, which boasts a massive 125 million global subscribers who pay an average of about $120 per year to watch streaming video content.
Still, when you consider Amazon’s dominant position in the e-commerce space, increasing penetration into cloud services with Amazon AWS and massive investment in streaming media and original content, the company remains a major player within all the top investment and service areas available on the internet.
Why Prime Has Played a Vital Role in Amazon’s Growth
Although offering two-day shipping free of charge to such a huge number of subscribers comes at a tremendous cost, the results have shown that the expense is worth it. This is because it is estimated that Amazon Prime members usually spend about twice as much at the e-commerce site than regular members.
In addition, the subscription service is a major driver for sales of the company’s own smart speaker and the Alexa digital assistant that powers it. Using the device has given Amazon a foothold in homes by making it simpler to shop online and added a ‘competitive barrier’ that makes it tougher for other retailers, including offline stores, to get consumers to shop at their stores.
Amazon has also leveraged the power and size of its Prime subscriber base to boost sales numbers at Whole Foods, a supermarket chain that the company acquired a year ago, offering shoppers subscribed to the service two-hour delivery of their groceries.
Prime’s Subscription Base Also Growing Rapidly in India
One of the most stunning revelations that was contained in Bezos’ letter, and is bound to be of great interest to investors in Amazon is just how well the company is doing in India. The Amazon CEO indicated that, in its first year, Prime grew faster than it has in any other country.
He also stated that Prime Video would invest heavily to procure original video content from India, saying, “Prime selection in India now includes more than 40 million local products from third-party sellers, and Prime Video is investing in India original video content in a big way, including two recent premiers and over a dozen new shows in production.”
All in all, the Amazon chief highlighted the fact that India is now one of the firm’s most significant non-US markets. The country has assumed greater importance for the retail giant, after losing out in the huge Chinese market to Alibaba.
Amazon Investing Heavily to Try and Outdo Rivals in India
So far, Amazon has spent more than $5 billion to boost its Indian business, with Bezos stating that the firm is ready and willing to increase its investment into a country where the company is involved in a high-stakes battle for dominance with local company Flipkart. More significantly, Flipkart is currently involved in advanced negotiations with US retail juggernaut Walmart, which is seeking to purchase a majority stake in the Indian firm.
While Amazon’s growth figures in India are definitely impressive, it is no secret that it still continues to lag behind Flipkart. According to officials from both Flipkart and Amazon, the American online retailer is still some way behind Flipkart in terms of monthly sales, especially with its fashion brands, Myntra and Jabong.
Other reports also indicate that there are plans at Amazon India to lower prices, alongside an increase in spending on its marketing in a bid to try and close the gap and increase market share in comparison to Flipkart.
Conclusion: What’s Next?
By hitting the 100 million subscriber mark, it would appear that Amazon is on course to achieve the year-end subscription target of 137 million. This would put the company past the current leader, Netflix, which recently reported that it had hit 125 million worldwide subscribers.
Prime remains the centerpiece of Amazon’s service ecosystem, with the company using other initiatives, including Prime Video, to attract more users into that ecosystem. A prime example of the kind of content, which the company hopes will increase the adoption of Prime by subscribers, is its pursuit of the NFL’s Thursday Night Football.
The announcement has also made Amazon one of the most attractive buys currently, with the Bank of America giving the company a Buy rating and setting a price target of $1,650. Immediately after the shareholder letter was released, Amazon stock rose 1.4 percent to hit$ 1,550.