India’s new e-commerce FDI norms will impact Amazon‘s price, selection and convenience for both customers and sellers in India, chief financial officer Brian Olsavsky said during the company’s earnings call on Friday.
“There is much uncertainty as to what the impact of the government rule changes is going to have on the e-commerce sector (in India). We remain committed to complying with all laws and regulations but we are evaluating the situation” Olsavsky said “Our main concern is to try and minimize the impact to our customers and sellers in India. We have built our business around price selection and convenience. We don’t think the changes help in those dimensions for both customers and sellers in India”
Amazon’s International growth also saw a notable slowdown in its crucial December quarter, comprising its Diwali sales in India and holiday sales across other International markets.
The company’s International net sales grew by 15% to $20.83 billion during the quarter, as compared to a 29% growth in the year-ago period. In the previous quarter, Amazon’s international sales had grown only 13% in the September quarter, with the company citing a later Diwali sale as one of the key reasons for the slower growth.
That said, the online retail giant was able to narrow its International losses by 30% to $642 million for the quarter, from $919 million in the corresponding quarter last year.
Olsavsky said that they have incorporated their best estimate for the India market into their Q1 guidance estimate that forecasts an overall net sales of between $56 billion and $60 billion for the first quarter.
Dropping products from the India marketplace
With the Indian government sticking to its February 1 deadline, Amazon has also started removing a range of products including its Echo range of smart speakers and its private label products ranging from batteries, electronic accessories, travel accessories, and apparel among others from its India marketplace on Thursday evening.
These products were primarily sold by entities like Cloudtail and Appario Retail, which have an equity participation from the US e-commerce major and are no longer allowed to sell on the platform, as per the new guidelines.
The retail giant’s hyperlocal offering Prime Now is also no longer offering groceries and electronic products from the company-fulfilled NOW store at the time of writing this article, while products from its supermarket chain partners like Big Bazaar, Star Bazaar, and More continues to be available for purchase.
ET reported on Friday that the revised FDI norms in the e-commerce sector is likely to affect up to 50% of the goods being sold on Amazon and Flipkart.
Overall, net sales for the fourth quarter grew by 19.7% to $72.38 billion while the operating income grew to $3.8 billion from $2.1 billion in the year-ago period.
Revenues from its subscription services, which is mostly fees associated with Amazon Prime subscription service, grew by 25% to $3.96 billion while Amazon’s “other” category, that includes its advertising business, increased by 95% to $3.4 billion.
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