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Here's Amazon's Latest Move to Lure India's E-Commerce Rupees

By Danny Vena – Apr 25, 2018 at 1:06PM

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By providing smartphone users with a small, low-data-use web browser, Amazon clearly hopes to win attention for its brand -- and eventually, more business. (AMZN 4.50%) dominates e-commerce in the U.S. market -- it nabbed 44% of domestic online sales in 2017, which represented about 4% of all retail sales in the country. And in recent years, the company has been intensifying its efforts to duplicate that success in international markets.

One country Amazon seems particularly interested in is India. Given its more than 1.3 billion inhabitants, it's easy to see why -- particularly since two-thirds of its population is under the age of 35, a demographic that is both technologically savvy and also coming into its prime earning years. And, thanks to the widespread availability of inexpensive smartphones and cheap data plans, India boasts the second-largest population of internet users in the world.

With all that in mind, Amazon is pulling out all the stops to make headway in India, and the company has come up with a novel way to win over consumers there.

Young adults seated around an outdoor table talking and looking at laptops.

A majority of the population of India is under age 35. Image source: Getty Images.

"Internet" for everyone

Amazon has launched a mobile web browser for Android phones in India called simply "Internet." It's said to be "extra small," taking up a minimal amount of smartphone memory, and also consumes less data when in use than other browsers -- features Amazon believes people will find enticing, as it offers the equivalent of additional internet access at no additional cost. The app also pledges to protect user privacy, an obvious nod to recent revelations about failures on that front in the tech industry.

A spokesperson for Amazon India provided these details in an interview with Quartz:

The Amazon Internet app is designed for Android smartphone users in India. It offers a small application size so users have storage for their favorite videos, music, and other apps, and it requests few permissions to maintain the user's privacy. Specifically, it is a lightweight, webview-based mobile browser, offering increased bandwidth savings, a small application size and reduced page load times. 

The data-light browser appears to be aimed at consumers with lower end phones that have less memory and storage, as well as slower mobile data speeds. 

A young family in traditional Indian attire seated around a laptop making an online purchase.

Online sales in India are expected to surge in the coming years. Image source: Getty Images.

The home team is ahead

The battle for India's e-commerce crown is heating up. The top player is hometown favorite Flipkart, which specifically dominates online sales of apparel -- but Amazon has run a close second. And while Amazon has made headway in the largest cities, smaller markets are still Flipkart territory. By offering its data-sipping app, Amazon may hope to make headway in areas where mobile networks run slower.

Flipkart's leading position has apparently made the company a tempting M&A target. In recent weeks, rumors have been rampant concerning a bidding war that has reportedly broken out between Amazon and Walmart (WMT 1.30%) to buy a controlling stake.

Recent reports suggest that Walmart could seal a deal that would give it a 51% stake in Flipkart as early as next week, according to Reuters. If such as result comes to pass, Amazon will have even greater incentive to double down on its efforts in India.

A lot up for grabs

Internet adoption is still in its infancy in India, and e-commerce is just getting started there. This means there's potential for a major boom in online sales there in the coming decade, and forecasters predict just that: While Indian e-commerce generated just $15 billion in 2016, revenues are is expected to top $200 billion by 2026. If that forecast proves correct, e-commerce at that point will account for 12% of all retail sales in the country, up from just 2% today.

India presents an intriguing opportunity for e-commerce providers, and with more than 1 billion people to serve, it's not a market Amazon is willing to cede. The company's new mobile web browser shows both the novel approaches it's willing to try, and the lengths to which it's willing to go, to compete there.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.

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