Two years ago, a venture capital firm in India was eyeing an investment in a promising quick-commerce startup. The startup’s instant delivery model was gaining traction in the South Asian market, a region where many similar ventures had struggled to succeed in more developed economies. However, there was a lingering concern: What if Amazon, with its vast resources and global influence, decided to enter this burgeoning sector and dominate it?
To address this concern, a partner at the VC firm reached out to his contacts within Amazon’s leadership. After those discussions, he walked away confident that Amazon had no plans to dive into quick-commerce in India. This assumption seemed like a safe bet at the time but is now proving to be a significant oversight.
The Rise of Quick-Commerce: A Market Missed by Amazon
Quick-commerce is rapidly gaining ground in India, providing consumers with a diverse range of products — from groceries to electronics — delivered within minutes. The sector’s top players, including Zomato’s Blinkit, Zepto, and Swiggy’s Instamart, are on track to achieve a combined annual revenue of approximately $4.5 billion. To put this in perspective, these sales represent a quarter of Amazon India’s total sales, which brokerage firm JM Financial estimates at $18 billion. Yet, Amazon seems to have largely ignored this fast-growing market.
An Overlooked Opportunity in a Critical Market
India, the world’s most populous country, is a crucial market for global tech giants. Despite billions of dollars in investments over the past 15 years, the country’s e-commerce sector grew by only 11% to 12% last year, according to industry estimates. In contrast, the quick-commerce market is expanding at an astonishing rate of over 125%. While this growth is partly due to the sector’s relatively small size, the potential here is undeniable.
As Rahul Malhotra, an e-commerce analyst at Bernstein, noted, these quick-commerce companies are “clearly taking share” from larger e-commerce players, raising critical questions about how traditional giants like Amazon will respond. The categories in which these instant-delivery firms operate — groceries, household items, electronics, and even smartphones — are among the highest traffic and sales drivers for e-commerce platforms. These companies can leverage their high traffic to cross-sell and upsell other products, a strategy that Amazon has traditionally excelled at but seems to be losing ground on in India.
Amazon’s Misstep: A Strategic Failure
Quick-commerce firms are not only capturing market share but also reshaping consumer behavior in India’s top cities. According to surveys by Bank of America and Bernstein, these companies are changing buying habits across the board. Gopal Kolli, founder and CEO of Solara, a premium home and kitchen products brand, observed a “visible shift of Amazon India customers to quick commerce.” Kolli noted that for many brands, including his own, the share of sales from quick-commerce platforms jumped from 0% to 20% in just one year, with some categories seeing even higher growth.
Amazon, however, has done little to tap into this market. Instead of launching its own quick-commerce service, the company has opted to mock the concept in its advertisements. This stance now appears increasingly out of touch with the evolving market dynamics in India. For instance, Blinkit, which was acquired by Zomato for less than $600 million in 2022, is now valued at over $13 billion according to Goldman Sachs. This valuation is more than half of Amazon India’s estimated worth.
Meanwhile, Amazon’s chief rival in India, Walmart-owned Flipkart, has been quicker to respond to the quick-commerce trend. Although some might argue that Flipkart’s response is still somewhat delayed, the company recently launched its own quick-commerce service, Flipkart Minutes. This move is widely seen as a strategic effort to attract urban customers who might otherwise turn to Amazon.
A Series of Fumbles: Amazon’s Declining Market Share in India
Amazon’s slow reaction to the quick-commerce boom is just one of several missteps in India. The company has been losing market share in the country for over three years, a trend highlighted by the recent resignation of Amazon India’s head, Manish Tiwary. According to Malhotra, Amazon has failed to capitalize on opportunities in quick-commerce, tier 2 markets, and high-growth categories like apparel.
Meesho, a social commerce platform backed by SoftBank and Prosus, has made significant inroads in smaller Indian cities and towns in just a few years. According to Morgan Stanley analysts, Meesho now has a larger market share in the mobile app space in India than Amazon. Flipkart’s apps boast over 50 million daily active users in India, while Amazon lags behind with fewer than 40 million, according to Bank of America analysts.
The growth of e-commerce in India is increasingly being driven by smaller cities, with 80% of Meesho’s customers coming from tier 2 cities and beyond. In fact, these smaller cities have outpaced larger urban centers in purchasing electronic accessories on Meesho’s platform, according to a recent report by the startup.
A Question of Priorities: Amazon’s Strategic Shift
Insiders familiar with Amazon’s operations in India suggest that the company has shifted its strategy under the leadership of Andy Jassy, focusing more on its cloud business than on e-commerce. This shift was somewhat publicly acknowledged last year when Jassy announced that Amazon would invest $15 billion in India by 2030 — with $12.7 billion earmarked for AWS operations and expansions. In contrast, Walmart and Flipkart are investing more than $1 billion annually into their e-commerce operations in India.
Amazon has also faced challenges with the slow adoption of its platform by Indian merchants, despite investing hundreds of millions in that strategy. This limited merchant pool hampers the growth and scalability of Amazon’s platform in a country with a vast population and diverse consumer needs.
The past five years have been particularly tough for Amazon in India. The Indian government imposed stricter regulations on how e-commerce firms operate in 2019, forcing Amazon to overhaul its business practices with local sellers. A 2021 Reuters report revealed that Amazon was allegedly giving preferential treatment to a small group of sellers in India, misrepresenting its ties with them, and using them to bypass foreign investment rules. Amazon denied these allegations, claiming the report was based on incomplete and incorrect information. Additionally, Amazon lost a high-profile bid to acquire Future Group, India’s second-largest retail chain, to rival Reliance, further highlighting the challenges the company faces in India.
At the time, Bernstein noted that Amazon was dealing with an “unfavorable” regulatory environment in India. However, Malhotra now believes that regulatory challenges are not the sole reason for Amazon’s struggles. “They haven’t been strategic enough. And founders — whether it’s Deepinder (Zomato), Aadit (Zepto), or Vidit (Meesho) or the team at Flipkart — have out-executed the management team [of Amazon],” he said.
Amazon’s Efforts to Adapt: Is It Too Late?
This is not to say that Amazon hasn’t attempted to adapt. The company is still pushing to expand its presence in India’s mobile payments market with Amazon Pay and has experimented with food delivery, although it eventually shut down that venture. Amazon also discontinued its wholesale distribution business and its foray into online education in the country.
On the retail front, Amazon is trying to cater to Amazon Fresh customers with two-to-three-hour delivery windows and continues to run a QVC-style shopping experience on its app, launched last year.
However, some analysts remain skeptical about Amazon’s ability to recover. One analyst, who wished to remain anonymous, pointed out that Amazon has already invested heavily in building a specific supply chain system in India. This infrastructure is not easily adaptable to meet the rapidly changing shopping habits of Indian consumers, making it difficult for Amazon to pivot quickly.
When asked about its performance, an Amazon spokesperson responded by claiming that Amazon.in remains India’s “most trusted online shopping destination” according to their data and external reports. The spokesperson also dismissed the information shared by TechCrunch as “factually incorrect and uncorroborated.”
Conclusion: The High Stakes of Missing the Mark
Amazon’s struggles in India serve as a cautionary tale of how even the most powerful companies can falter when they fail to adapt to rapidly changing market dynamics. As quick-commerce continues to reshape the e-commerce landscape in India, Amazon’s missteps may have long-lasting repercussions. For now, the company appears to be playing catch-up in a market where speed and agility are increasingly the keys to success.
