Amazon (NASDAQ:AMZN) has been fighting a war on two fronts in India this year as the threat posed by Walmart (NYSE:WMT) has been compounded by Reliance Retail's foray into the country's e-commerce space with JioMart.
But it looks like the e-commerce giant has been able to hold its own amid the growing threat of its rivals. A recent survey commissioned by Bank of America and conducted by SurveyMonkey in India suggests that neither JioMart nor Walmart-owned Flipkart has been able to dent Amazon's prospects in India so far. And according to the 1,000 survey respondents, Amazon has been able to keep Indian customers engaged despite having other online options.
Amazon remains undaunted despite the growing challenges
According to the survey, 71% of respondents prefer using Amazon, while Flipkart garnered the support of just 22%. What's more, only 5% of the respondents chose their preference on the basis of price, indicating that Amazon may have built up a sticky customer base in India that will not be easily swayed.
Of course, these are the results from just one survey, but other recent data indicates that the findings may be representative of the shift taking place in India's e-commerce landscape.
Counterpoint Research reported in August that Amazon has snatched the lead from Walmart in online smartphone sales in India. Amazon cornered 47% of that market in the second quarter of 2020, topping Flipkart's 42%. This was Amazon's highest market share ever thanks to the popularity of smartphones from companies like OnePlus, Samsung, and Xiaomi.
Amazon may have benefited from a shift in Indian consumers' preference for more expensive smartphones -- priced between 15,000 and 20,000 Indian rupees ($203 to $271 approximately) -- which accounted for most of the company's smartphone sales during the quarter. Flipkart, on the other hand, controlled more than 50% of the entry-level market with smartphones priced below 10,000 rupees (roughly $135).
Amazon's gains in the online smartphone market this year represent a coup as the industry was previously dominated by Flipkart, which enjoyed 57% market share in the third quarter of 2019. Moreover, the Walmart-owned retailer was aiming to win a 70% share of the overall e-commerce market and 75% of the online smartphone channel in 2020 based on its strength in smartphones, a category that has accounted for half of its gross merchandise volume (GMV).
Flipkart may still be able to claim the No. 1 spot in India's e-commerce industry, but its American rival is clearly gaining ground.
Encouraging signs on the grocery front
The entry of JioMart into grocery retail has been another headwind for Amazon. The online grocery upstart, owned by Reliance Retail, has reportedly been fulfilling more orders than Amazon Pantry within just a few months of its launch in the country, helped by a wide network of physical stores.
But the results of the survey indicate that JioMart may have some chinks in its armor that Amazon can exploit. Two-thirds of the respondents say they have already ordered from JioMart, but 20% of those customers are uncertain about reordering.
JioMart was plagued with quality and delivery challenges early on. Meanwhile, Amazon has stepped up its game by expanding its Pantry service to 300 Indian cities, up significantly from just 110 in May 2019.
What's more, Amazon is busy scaling up its delivery infrastructure in India and has witnessed terrific growth in the number of Prime subscribers. All of this indicates that the company has been able to stand its ground in a fiercely contested retail market that still has a lot of potential for growth.