Why is Amazon betting big on India exports? 💰
No wonder so many things coming together.
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India’s export value in 2013 was $312 Billion, it has 2X-ed to almost $714 Billion. No wonder Amazon pledged $26 Billion - here’s how it wants to be part of the India export story 👇🏼
Some quick context 🗓️
The ‘Make In India’ movement, production-linked government schemes & foreign direct investment (FDI) pouring into the country helped in the growth of both these segments.
But, why does Amazon wants anything to do with export goal? 🤔
Think of this from a pure macro. China Vs US ties aren't good at the moment, pointing to a worsening scenario. Take the example of sustainable exports for example - Chinese exports to the US are now being charged a 20% import duty.
Amazon’s $26 Billion investment is to bring 10 Million MSMEs online, increase export volume to $20 Billion & in turn create 2 million jobs - by 2025.
India seems like a safe bet for Amazon Global 🇮🇳
Amazon is positioning itself as the player who will solve Indian exports to the US and the rest of the world. Amazon wants to create/ expand & monopolize the exports, for everything commerce.
Here’s Amazon's game plan for exports by 2030 ⬇️
1/ Building the pipeline for Indian sellers 🌍
It launched its global seller program back in 2013, it's investing heavily to get Indian sellers/suppliers to be able to export to the US, UK, Canada, France & Germany. In FY 2023, this has processed $8 Billion worth of exports from over 125,000 exporters.
Some specific regions gaining momentum.
Sri Ganganagar, Rajasthan - $13 million
Haridwar, Uttarakhand - $23 million
Neemuch, MP - $1 million
Kolhapur, Maharashtra - $4 million
2/ Move offline to online, with tech📱
The majority of commerce in India is still retail. The significant friction to take this online is first logistics, demand generation & inventory/ pricing strategy. Amazon wants these sellers to just supply by coming online & let Amazon solve everything else - Amazon Tatkal is one such program.
3/ Picking up strategic ports + Indian railway 🚢
It has partnered with Indian railways for 625 KM western dedicated freight corridor - these cargo trains will now be extremely fast and will connect to Jawaharlal Nehru Port, one of the largest cargo-handling ports in India. To get you the magnitude of this move - in 2018 Jawaharlal Nehru Port alone handled 64% of import traffic & 34% of export traffic - mind blown.
4/ Partnership with India Post 📭
With over 1,55,618 offices, Indian Post is bigger than SBI's 28,856 branches. Amazon signed a deal to allow its seller to drop off their packages in an Indian post office, it will pick them up & handle the rest of the logistics.
5/ Opening up for every D2C player 🤯
It recently opened up its logistics API for any D2C brand wanting to use Amazon “only for logistics” - even if the sale has nothing to do with Amazon. Now imagine why Amazon would do this - I want you to think (this reminds me of Shopify & why it would launch its plugin marketplace)
That’s all on Amazon’s export capture.
Amazon is that wild Godzilla. It's a strategic advantage & as I like to call it - "Right to Win" is logistics & distribution. It's pushing the needle on both of these to become the monopoly for anyone trying to export to the globe.
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