When Jeff Bezos donned a bandhgala jacket two years ago and posed for photographs in India, he wasn't just promoting Amazon.com Inc.'s year-old business in the country. The web retailer's chief executive officer was also putting his reputation on the line to break into the emerging e-commerce market. Now, with 80 million products for sale, 120,000-plus merchants and more than two dozen warehouses, Bezos's protégé Amit Agarwal is aiming to make Amazon the country's top online store by sales ahead of the Diwali shopping season. Known as the "festival of lights," the run-up to the celebration is India's biggest retail event, when consumers buy everything from clothes and electronics to jewelry and cars. Indians will spend as much as $1.7 billion online during Diwali this year, according to RedSeer Consulting. Flipkart Ltd., India's top web retailer, and local rival Snapdeal, are well aware that they're facing a critical test this year amid Amazon's onslaught. All three are flooding newspapers, billboards and TV shows with ads and are offering discounts for Diwali, which now makes up a third of annual e-commerce sales.
At stake is the future of India's online shopping market, as well as Amazon's global expansion plans, which had faltered after it failed to conquer China.
"This season could decide who'll be the ultimate winner," said Haresh Chawla, a Mumbai-based partner at private equity firm India Value Fund Advisors and an angel investor.
The prospect of becoming the main web store in a country of 1.25 billion people, who are just learning how to shop online, is tantalizing. RedSeer Consultancy Pvt. estimates that annual online sales will be $80 billion to $100 billion by 2020 from the current estimate of about $13 billion.
"Barely 2 percent of the population shops online," said Mrigank Gutgutia, who covers consumer internet trends at the Bangalore-based researcher. "It is still only the tip of the India e-commerce iceberg."
Merrill Lynch estimates that Amazon may sell as much as $81 billion in merchandise by 2025, up from $3.7 billion last year. Becoming India's top web retailer would be a vindication for Amazon.
"The biggest opportunity and the biggest challenges are both in India," said Agarwal, chief of Amazon India. "It's going to be a great Diwali."
After graduating from Stanford University, the 42-year-old spent part of his career at Amazon's Seattle headquarters as Bezos's technical shadow, a coveted position at the company that grooms future leaders by giving them a front-row view of how the business is run.