Amazon bets $3b on India's fast-delivery boom, sources say

Walmart's Flipkart and Amazon, which dominate India's e-commerce space, arelate entrants in quick commerce. The $19 billion sector is set ​to more than double in size to $41 billion by 2030,.

Amazon plans to invest $1 billion in the quick commerce sector by the ​end of 2027, and another $2 billion by 2030, two people with direct knowledge of the plans said. The planned investment has ⁠not previously been reported.

Amazon declined to comment on the planned investment numbers. The retailer, however, said its quick commerce business has crossed $1 billion in annualised gross sales over ​the past three months, "making it the fastest-growing e-commerce business in Amazon India's history.

"More small neighborhood warehousesA key focus of the planned investment will be adding new small neighbourhood ​warehouses to the current Amazon Now service network from where deliveries are shipped quickly, said both sources, who declined to be identified as the plan is confidential. "Expansion needs money," the first source said.

Amazon counts India as a key growth market, where it is expanding its data centre, cloud and e-commerce businesses. Read More:Meta's Charm gadget carries CEO Zuckerberg's big AI ambitions.

But it also faces India's tight regulations for foreign e-commerce companies and a pending 2024case​in which it was found by the antitrust watchdog to have given preference to select sellers in breach of the law — allegations it denies. The sector's rise since ​2022 coincided with growing concerns aboutrider safetyas bikers zip through residential areas to deliver orders fast.

India's government in January ordered companies tostoppromoting such operations as "10-minute" services. Domestic giants Eternal's Blinkit, ‌Swiggy and ⁠IPO-bound Zepto control 77% of the market, together operating more than 4,500 stores, while Walmart's Flipkart has more than 1,000 and an 11% market share, Datum data shows.

Amazon has only a 6.2% market share. The first source said Amazon was targeting around 1,300 stores by April next year, from around 750 now. Daily essentials focus with challenges.

The other key areas of spending, the first person added, will be strengthening inventory management software at stores, deploying AI tools for demand prediction and expanding product selection. "The focus will ​be daily essentials.

If the order is ​unlikely to be repeated, Amazon does ⁠not plan to stock it right now in quick commerce," said the person, explaining why Amazon does not stock i. Phones like its quick commerce rivals.

Bernstein in a July note warned that groceries alone cannot cover the high costs of quick commerce as average ​order values are low, and "non-grocery items carry higher prices and higher margins. "Amazon does not agree with critics who say it ​missed the bus, one ⁠of the sources said.

The company wanted to get the model right, such as having a cold storage room in each store and not just a refrigerator.

Satish Meena, founder of Datum Intelligence, said it will not be easy for Amazon to catch up with rivals who offer quality service and have loyal customers, but it could lure their shopping website ⁠customers to ​fast deliveries.

The Amazon Now service, which sits within the main Amazon app, is currently offering a ​20% cashback discount on some initial orders above 499 rupees ($5.20), and free delivery above 99 rupees ($1) for select customers. "It took some time for Amazon to commit.

There appears to be a realisation that this is ​a model they have to invest in," Meena said. "They are doing discounts, which can help lure current Amazon customers to quick commerce. "