Amazon launched an Indian Marketplace (www.amazon.in), its 10th country specific site (Amazon previously only operated a comparison shopping site in India (www.junglee.com)). The Indian site will be served exclusively by third-party sellers to comply with local laws and will initially focus on the media category (books and movies), followed by consumer electronics.
Local Laws of India do not permit Foreign Companies to
operate in Multi-Brand Retail and thus Amazon has to be content as a Facilitator of e-commerce for various Indian companies. By doing so Amazon will end up Building Presence, Build Delivery & Distribution Network, Adopt to the Learning Curve of Cash on Delivery [Most Popular in India] so when the Govt of India opens the gates for FDI in e-commerce, Amazon can directly start selling its products and give Indian retailers a run for their money.
Amazon and Grocery Retailing in the US
Amazon is the best company in the world to have highly efficient Systems and Processes to make profits out of even retailing Groceries. Amazon has operated a grocery delivery business (including fresh produce) in Seattle for 5+ years, so we think it has a strong understanding of the operational challenges, financial requirements and ROI of operating a fresh grocery delivery business. The grocery category is a ~$600bn opportunity in the U.S. that is characterized by high purchase frequency and low margins. As a result, we anticipate that Amazon will approach the grocery opportunity with low margin aspirations and the goal of increasing purchase frequency of non-grocery household items.
Amazon and Online Video Streaming
Amazon recently announced an exclusive video content licensing agreement with Viacom for ~4K Nickelodeon, MTV and Comedy Central shows. Importantly, the licensing agreement includes kids programming, such as Dora the Explorer, SpongeBob SquarePants, Go Diego, Blue’s Clues, etc., that until recently was available on Netflix. We think the kids programming significantly increases the value proposition of Prime Instant Video for parents of young children. Amazon’s content licensing costs now exceed $1bn per year.