Amazon Starts India Shopping Service as Internet Market Grows
Amazon.com Inc. (AMZN), the world’s largest Internet retailer, started an online shopping service in India to profit from the world’s second most populous nation as it waits for the country’s retail regulations to loosen.
The website named Junglee, which means “wild” in Hindi, has links that take potential buyers to other sites that sell products from mobile phones to toys. It will also feature goods from Amazon.com, the Seattle-based company said in an e-mail statement.
Amazon and eBay Inc. are among companies that could benefit from India’s online shopping market that is expected to more than triple by 2015. Junglee, which doesn’t take direct payments from shoppers and connects them to other sites, gives Amazon a presence in India, which bars foreign sellers of multiple brands.
“Amazon will get a foothold in the Indian market,” said Sameer Narang, a Mumbai-based analyst with HDFC Securities Ltd. “They’ll be able to understand the market, customer behavior, the logistics in the country. In a couple years, the market has to open up so they’re just warming their feet.”
India suspended its decision in December to allow overseas companies such as Wal-Mart Stores Inc. and Carrefour SA to sell more than one brand in the Asian nation.
The new service may help Amazon boost profits in emerging markets. The Seattle-based company said on Jan. 31 that fourth- quarter sales missed estimates on lower-than-expected revenue from digital media such as the video-game market. Amazon is relying more on third-party sellers, which make up as much as 36 percent of units sold, according to the company.
Retailers want to tap markets such as India, where sales are expected to grow to $785 billion in 2015 from $396 billion in 2011, according to estimates by Business Monitor International.
India’s online retail industry is expected to surge to 70 billion rupees ($1.43 billion) by 2015 from 20 billion rupees as broadband availability becomes more common and the number of Internet users grow, the Associated Chambers of Commerce said in a July report.
India’s government on Jan. 10 raised the limit on overseas ownership of stores selling a single brand to 100 percent, from 51 percent earlier. Foreign retailers may also fully own wholesale operations.
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