Is Now the time for Amazon? Only time will tell.

After three earlier attempts, Amazon took off yet again to hit India’s rapidly growing quick commerce turf with Amazon Now, after a months-long pilot phase. The Seattle-headquartered ecommerce giant has just announced its entry into the 10-minute delivery format in parts of Bengaluru.

“The initial idea is to set up 10-20 dark stores in three or more pin codes and eventually scale it to a few more cities as the festive season sales come closer,” an Amazon insider said, refusing to be identified.

In a report titled, Quick Commerce: Another Month, Another Player & This Time It’s Amazon Now, US investment bank Jefferies noted that as a late entrant into India’s $5 Bn quick commerce market, which is likely to exceed $11 Bn by 2030, Amazon will have to consider serious scaling in terms of coverage to compete with seasoned players.

For Amazon, which accelerated the ecommerce revolution in India, it is not a question of simply jumping on the bandwagon. The stakes are really higher than what even its leadership perceived a few years ago. The entry into the fast-delivery segment by Amazon or its rival Flipkart has been a compulsion, noted the brokerage, citing an ever-expanding ambit of quick commerce players like Blinkit and Zepto.

Several sources in Amazon India admitted that the company’s topline was being hit harder by the quick commerce incumbents than its fierce competitors like Flipkart, or even Meesho.

“I think they are two years late from when they should have been in quick commerce,” a top industry observer, familiar with Amazon India’s business operations, told Inc42.

“The internal leadership dynamics within the company which also underwent change last year was not fully aligned with the quick commerce execution.”

The Indian arm of the US retailer has replaced Manish Tiwary with Samir Kumar as the country manager. The restructuring came at a time when Amazon marketplace showed muted revenue growth of 3.4% and 14% in FY23 and FY24, compared to a 49% and 33% surge in the previous two years.

Out of a total marketplace revenue of INR 25,593 Cr in FY24, Amazon’s ad revenues grew substantially by 24% to INR 6,649 Cr, while revenue from third-party sellers increased only 14% to INR 14,285 Cr.

This depicts a gloomy picture of Amazon’s core businesses stagnating under regulatory pressure and in the face of quick commerce onslaught.

“This is where the problem is. The core marketplace business, seller revenues are declining and quick commerce is a major reason for that. It has proven to be a game-changer in the urban centres, more precisely, the top eight cities of India which were Amazon’s key markets,” Sateesh Meena, who heads research advisory firm Datum Intelligence, told us.

“It’s worse because Amazon’s revenue engine – the Prime customers – is confined largely to these places. The consumers have been dividing their wallet........

© Inc42