Amazon India’s Market Debut: Strategic Spin-Off or High-Stakes Move?

What's the first thing that comes to your mind when you think about ‘Amazon’? Maybe it’s the satisfying click when you order something that’s been lying in your cart. Or the thrill of unboxing a surprise gift sent by a loved one. From fast deliveries to binge-worthy shows, the convenience that Amazon brings to our daily lives is unmatched.

However, the US e-commerce behemoth is in the news for a different reason. Amazon has created a buzz among investors with the announcement of its India unit, Amazon India’s, upcoming IPO. Sources claim that the company has engaged JP Morgan and Wall Street bankers for the purpose and is also in talks with a number of Indian investment firms.

However, the main query arises here is whether this is a wise strategic choice or a speculative move for investors. Let’s find out.

Assessing Amazon India’s Market Strength

The Indian marketplace platform of the e-commerce giant, Amazon India Seller Services, saw an impressive revenue jump of 14.44% in the financial year 2023-24, with figures exceeding ₹25,000 crore. The improved financials also narrowed the net loss by 28.5% in FY24 compared to the previous year. However, improved financial performance is not the only factor to consider when analysing the company’s strength. Other key parameters include:

• Diverse Offering
  Amazon offers everything from apparel to home appliances, groceries and pharmaceuticals. The company’s ability to cater to both urban and rural markets has improved its reach and revenue potential.

• Technological Innovation
  Continuous investments in technology and logistics infrastructure have strengthened Amazon India’s supply chain network. Apart from this, operational efficiency has strengthened customer trust and loyalty.

• Prime Membership
  Amazon Prime has been a major success in India. Amazon has created a loyal customer base with benefits like free delivery, exclusive deals and access to Prime Video. This recurring revenue stream from Prime memberships adds to the company’s financial stability and attractiveness to investors.

• Adaptation to Local Market
  Amazon India has tailored its strategies to align with local market preferences. For example, the company has introduced features such as voice shopping in regional languages and partnered with local sellers to expand its portfolio of products.

• Sustainability Initiatives
  Amazon India focuses on sustainability by reducing packaging waste and promoting eco-friendly products. All this not only resonates with environmentally conscious consumers and investors but improves its brand image and aligns with global ESG (Environmental, Social, and Governance) trends.

Amazon vs Competitors: A Comparative Analysis

There is no denying that Amazon has held a strong position in the Indian market since its entry in 2013. However, stiff competition from Walmart-owned Flipkart and Reliance Retail is keeping things spicy.

As of 2025, the Indian e-commerce market is projected to grow to $133 billion, up from $72 billion in 2022. Amazon, Flipkart and Reliance Retail are expected to dominate 90% of the market.

Currently, Flipkart leads the e-commerce sector with 48% market share, while Amazon holds the second position. Flipkart’s dominance in fashion, driven by Myntra’s 60% market share, has given an edge over Amazon, which holds only 20% in this segment.

Reliance Retail is also steadily capturing the market share. The company is leveraging its extensive offline retail network and Jio’s digital ecosystem. Reliance has gained a presence in Tier 2 and 3 cities, where it has 70% of its stores. Not only that, Reliance’s profitability with an EBITDA (earnings before interest, taxes, depreciation and amortisation) margin of 6-7% contrasts sharply with the negative EBITDA margins of both Amazon and Flipkart.

Amazon is also lagging behind players like Blinkit, Zepto and Swiggy Instamart in the quick-commerce segment. The sole reason? Late entry.

Amazon India’s IPO Dreams: What’s Holding it Back?

Amazon India’s road to an IPO is far from smooth. A recent investigation by the Competition Commission of India (CCI) revealed that the company had breached FEMA guidelines by favouring select vendors. It was found that Appario, a major seller on Amazon, was granted special privileges in inventory management.

Other challenges include:

• Foreign Direct Investment (FDI) Rules

FDI regulations in India restrict foreign ownership in multi-brand retail trading (MBRT) to a maximum of 51%, subject to government approval. Additionally, individual states can choose to permit or restrict MBRT operations within their jurisdictions. These rules limit Amazon’s operational scope compared to other domestic players.

• E-commerce Model Restrictions

Indian regulations prohibit foreign companies from adopting an inventory-based e-commerce model. Due to this, Amazon can only function as a marketplace, connecting buyers and sellers without directly controlling inventory or pricing.

• Data Localisation

India’s strict data localisation laws under the Digital Personal Data Protection Act (DPDP) of 2023 mandate that Sensitive Personal Data (SPD) such as health and financial information, be stored locally. The law also requires Critical Personal Data (CPD), crucial for national security, must remain within India. Sticking to these regulations will require Amazon to make significant investments in local data centres and major operational overhaul.

Conclusion

The success of Amazon India IPO will depend on how effectively the company addresses the regulatory challenges and leverage growth opportunities. The Indian e-commerce market is still in its early stages of penetration with the potential for growth in Tier 2 and 3 cities. Amazon’s investments in logistics, technology and localised offerings will be crucial in capturing this untapped market. Additionally, by adding more sparkle to its shelves with premium categories like beauty and personal care, building loyalty programmes and expanding its product portfolio may help Amazon differentiate itself from competitors.