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For more than a decade, Amazon has tried with little success to become a big e-commerce player in the world’s most populous country, China. Now it’s becoming clear that the biggest international opportunity for Jeff Bezos’s company is no longer China, but India instead.
Last week, reports surfaced that Amazon has started listing a variety of products for sale on a competitor’s site in China: Alibaba’s Tmall shopping marketplace. The move signals that Amazon is not getting enough distribution through its own shopping site there. It’s also a stunning acknowledgment that a decade into its foray to steal market share away from Alibaba’s home-grown sites like Taobao and Tmall, Amazon needs its biggest competitor’s help. Could you imagine Amazon selling stuff on eBay in the U.S.? No shot.
Over the years, Amazon has sent several executives to China to try to fix the business. Long-time Amazon exec Steve Frazier was there for several years, before moving back to the U.S. in the fall. The business is now run by another non-native, Doug Gurr, who has been with Amazon since 2011.
Amazon does not disclose financial information for its China business, but research firms estimate it accounts for a mere 1 percent to 3 percent of the business-to-consumer e-commerce market in China. It seems unlikely that the Tmall deal is a precursor to Amazon simply closing up shop in China — the company has somewhere between 10 and 15 warehouses in the country and can’t simply ignore the market.
But it does seem reasonable that Amazon could scale back investments there and reallocate them to another big, burgeoning e-commerce market where it actually has a shot: India. And, in fact, a person familiar with the company’s practices says that Jeff Bezos is thinking along those lines.
“They are more focused on succeeding in India than trying to turn around China,” this person said.
This seems like a good idea. The Indian e-commerce market is about five to 10 years behind China in market maturity, a local CEO, Kunal Bahl of Snapdeal, estimated recently, but growing very quickly in the second-most populous country. Shopping on mobile devices is also exploding in popularity, as is the number of phones connected to the Internet. Here are three charts I put together back in July highlighting these trends.
While two local companies — Flipkart and Snapdeal — are popular, neither yet dominates the market like Alibaba does in China. That’s probably part of the reason Amazon is going to pour $2 billion into its India online store, which launched in 2013, as Bezos announced in an act of showmanship last year a day after Flipkart had announced a $1 billion investment of its own.
It’s also worth noting who is running Amazon’s India business: A long-time Amazonian named Amit Agarwal. That name probably doesn’t mean much to people outside of Amazon, but inside it means a lot. Agarwal is one of only a handful of Amazon employees who have worked as one of Jeff Bezos’s “shadows.” These shadows, or “technical advisors,” work side by side with Bezos and often end up in some of the most critical roles at Amazon after their Bezos master class is over. Agarwal held this role from 2007 to 2009.
The fact that Agarwal is now running the India business says a ton about how seriously Amazon and Bezos are taking it.
An Amazon rep declined to comment.
Correction: An earlier version of this story misspelled the last name of the head of Amazon’s China business. It’s Gurr, not Hurr.
This article originally appeared on Recode.net.
