Amazon bets $3 billion on India's fast-delivery boom, sources say
Amazon plans to invest $1 billion in the quick commerce sector by the end of 2027, and another $2 billion by 2030, two people with direct knowledge of the plans said. The planned investment has not previously been reported.
Highlights:
- Quick commerce space has reshaped online shopping in urban India
- Amazon investment to expand new stores, better stock selection
- Company to focus on daily essentials, not one-off buys, source says
- Some experts say Amazon could face challenges in catching up
US e-commerce retailer Amazon will invest $3 billion to expand its India quick commerce business by 2030, two sources said, its biggest bet yet on a sector where rivals have raced ahead by popularising deliveries within minutes.
The instant deliveries sector, dubbed "quick commerce", has become a rapidly growing force and reshaped how urban Indians shop for everything from milk and chocolates to iPhones and electronics, which were once only bought from retail stores or major e-commerce websites where deliveries took time.
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Walmart's Flipkart and Amazon, which dominate India's e-commerce space, are late entrants in quick commerce. The $19 billion sector is set to more than double in size to $41 billion by 2030, according to Datum Intelligence.
Amazon plans to invest $1 billion in the quick commerce sector by the end of 2027, and another $2 billion by 2030, two people with direct knowledge of the plans said. The planned investment has not previously been reported.
Amazon declined to comment on the planned investment numbers. The retailer, however, said its quick commerce business has crossed $1 billion in annualised gross sales over the past three months, "making it the fastest-growing e-commerce business in Amazon India's history."
More small neighbourhood warehouses
A key focus of the planned investment will be adding new small neighbourhood warehouses to the current Amazon Now service network from where deliveries are shipped quickly, said both sources, who declined to be identified as the plan is confidential.
"Expansion needs money," the first source said.
Amazon counts India as a key growth market, where it is expanding its data centre, cloud and e-commerce businesses.
But it also faces India's tight regulations for foreign e-commerce companies and a pending 2024 case in which it was found by the antitrust watchdog to have given preference to select sellers in breach of the law — allegations it denies.
The sector's rise since 2022 coincided with growing concerns about rider safety as bikers zip through residential areas to deliver orders fast. India's government in January ordered companies to stop promoting such operations as "10-minute" services.
Domestic giants Eternal's Blinkit, Swiggy and IPO-bound Zepto control 77% of the market, together operating more than 4,500 stores, while Walmart's Flipkart has more than 1,000 and an 11% market share, Datum data shows.
Amazon has only a 6.2% market share. The first source said Amazon was targeting around 1,300 stores by April next year, from around 750 now.
Daily essentials focus with challenges
The other key areas of spending, the first person added, will be strengthening inventory management software at stores, deploying AI tools for demand prediction and expanding product selection.
"The focus will be daily essentials. If the order is unlikely to be repeated, Amazon does not plan to stock it right now in quick commerce," said the person, explaining why Amazon does not stock iPhones like its quick commerce rivals.
Bernstein in a July note warned that groceries alone cannot cover the high costs of quick commerce as average order values are low, and "non-grocery items carry higher prices and higher margins."
Amazon does not agree with critics who say it missed the bus, one of the sources said. The company wanted to get the model right, such as having a cold storage room in each store and not just a refrigerator.
Satish Meena, founder of Datum Intelligence, said it will not be easy for Amazon to catch up with rivals who offer quality service and have loyal customers, but it could lure their shopping website customers to fast deliveries.
The Amazon Now service, which sits within the main Amazon app, is currently offering a 20% cashback discount on some initial orders above 499 rupees ($5.20), and free delivery above 99 rupees ($1) for select customers.
"It took some time for Amazon to commit. There appears to be a realisation that this is a model they have to invest in," Meena said. "They are doing discounts, which can help lure current Amazon customers to quick commerce."
