Amazon has opened its largest ever building – but it’s not in the US
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Amazon has opened its largest ever building – but it’s not in the US

Ecommerce giant Amazon is setting its sights on a huge new market outside of the US – at least, the fact that it’s opened its largest-ever building in Hyderabad, India, seems to suggest as much. To be fair, Amazon’s Indian ambitions aren’t exactly news (the company has been gearing up to make a push into the country for most of this year). But in light of a number of fresh hurdles that foreign ecommerce giants will face in India, there’s no doubt that the company’s new offices signal that it’s not planning to pull back.

Amazon’s share price has appreciated by 24% so far this year

Amazon Sept 9

Source: Yahoo Finance

The new building will constitute a 9.5-acre campus in the region – far and away the biggest indication that Amazon’s enormous investment into India is not slowing down. Despite challenges in the country, there’s no secret about why Amazon is pushing ahead with its plans: India could be huge for ecommerce, and is in an early enough state of development that the growth is just waiting to be captured.

Internet penetration across the country stands at just 3% - but younger, class-mobile, Indians are likely to push the population further online over coming years. It’s also true that a rush on the part of internet companies to find their next billion people will help unlock some of the potential inherent in that market. How much potential does it have? According to “some analysts” (CNBC tells us) the country’s ecommerce market “will be worth $100 billion by 2022”.

This potential, of course, has to be measured against the challenges. Most onerously for Amazon and other foreign giants hoping to capture a major stake is the recent emergence of new ecommerce regulations. These won’t stop players of Amazon’s size, but they’ll help to level the playing field with smaller local companies. Additionally, Amazon faces stiff competition from companies like Walmart.

When it comes to the next few decades of growth in the digital world, India is the prize for which the world’s biggest names are competing. And Amazon is ready to pursue it aggressively.

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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