Amazon’s Explosive Growth in India is Nothing Short of Remarkable

indiaAmazon.com, Inc. (NASDAQ:AMZN) may not have been operating in India for long, but the king of online retail is already making some big inroads.

Amazon began offering its trademark online shopping experience in India in 2013, and according to Morgan Stanley, controlled 12% of the market at the end of 2015. That’s taking a big chunk out of other e-commerce plays there, including the nation’s two largest home-grown e-tailers, Flipkart and Snapdeal.

Analysts expect that Amazon’s big growth in India is only continuing through 2016, with some even estimating that AMZN might have already usurped Snapdeal from the #2 spot.

What’s more, Indian consumers are enjoying Amazon’s shopping experience more that its competitors. A July survey from Forrester Research asked a sample of shoppers what online retailers they used, allowing for multiple answers. 76% of those polled indicated they used Amazon, while Flipkart had 68%. Snapkart was even lower down the totem pole. That’s up from only 30% of Indian shoppers choosing Amazon in a similar 2014 poll.

Similar to their American counterparts, Indian shoppers like Amazon because of its ease-of-use and quick shipping times.

AMZN is taking note of their big growth in the region, and is stepping up efforts to serve current and future demand. The company unveiled plans last month to set up six new Indian distribution centers — essentially giant warehouses to store commonly-ordered goods in various regions that they can then ship out quickly to local customers.

The one barrier Amazon faces in India is the fact that competitors offer big discounts and services like cash-on-delivery (C.O.D.), although the Indian consumer seems to be evolving:

The more deeply online shopping takes root in India, the more consumers there put a premium on service quality. This presents a big challenge for online retailers there, who face many infrastructure hurdles, such as establishing reliable home-delivery services and distribution systems. Improving the quality of services is difficult under those circumstances.

Amazon shares fell $6.45 (-0.85%) to $754.13 in Wednesday afternoon trading. AMZN has gained 11.9% year-to-date, compared with a 5.84% rise in the benchmark S&P 500.

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