It was June 2013, when Amazon, the world’s largest e-commerce and cloud computing company, went live with its India marketplace. By 2016, the company had spent $5 billion to grow its e-commerce business in India. In January 2020, Amazon founder Jeff Bezos held ‘Amazon SMBhav’, a mega summit for SMBs (small and medium businesses) in India. At the summit, he said “I predict the 21st century will be the Indian century. This country has dynamism and energy and everywhere I go here, we see there is an improvement in growth. This country has something special.”
At the event, Bezos, who stepped down as CEO and became executive chairman in 2021, announced that he would invest $1 billion in digitizing SMBs in India. Bezos’ move turned out to be a boon as the pandemic struck soon after, prompting millions of SMBs and startups to join various ecommerce platforms in order to survive and grow amid lockdowns.
“Today, more than 2.5 million micro, small, and medium enterprises work with Amazon India, including sellers, artisans and weavers, delivery and logistics service people, and more,” Kapil Sharma, Director Advertiser Success at Amazon Ads India tells e4m with pride.
“Almost 30 years ago, Amazon was a small business founded on an entrepreneur’s vision and passion. While the company has grown over the years, Amazon has retained that same entrepreneurial spirit and has never lost sight of the importance of supporting SMBs,” Sharma further said, highlighting the significance of SMBs in the company’s growth in the world’s second largest consumer market after China.
The online retail giant has committed investments worth $6.5 billion in the country to date. Over the years, the company has also expanded its offerings in sectors like digital payments, music streaming, grocery delivery, video streaming, and education among others.
Sharma noted, “Amazon invests in the success of entrepreneurs, artisans, and small businesses selling in the Amazon Store. When they thrive, our customers benefit from the products and services they offer. That’s part of the reason Amazon has invested more than $30 billion globally in logistics, tools, services, programs and people to foster the growth of our sellers.”
In 2021, Amazon announced the $250 MM Amazon Smbhav Venture Fund to invest in tech startups. Over the last 24 months, Smbhav Venture Fund has made several investments, including companies like FreshtoHome, XYXX, Hopscotch, Fitterfly, Cashify, MyGlamm, M1xchange, and smallcase.
Amazon as an ad platform
There are about 700 million active internet users in the country. Of that, more than 200 million are shopping online, industry estimates say.
Thanks to the growth of SMBs over the past few years, the advertising spends on ecommerce platforms has also gone up significantly. It surpassed $1 billion in 2022 and is likely to expand faster than the whole digital advertising ecosystem in the coming years as more customers purchase online, industry leaders say.
Amazon India’s advertisement revenue rose 63% to ₹4,170 crore in FY22. While the company doesn’t share the contribution of SMBs separately in its financial statements, it is believed that small and medium enterprises are driving the giant’s ad revenue.
Amazon India commands more than 8% of the overall online ad market, trailing Google India (Rs 24,000 Cr), and Facebook India (Rs 16,000 Cr).
Even the Walmart-backed Flipkart posted 50% year-on-year growth in ad revenue at ₹2,080 crore in FY22. The growth of Amazon and Flipkart Ads in India signals how ecommerce platforms are challenging the duopoly of Google and Meta who dominated India’s digital advertising ecosystem till a few years ago.
Both the e-tailers are yet to post their FY23 financial reports, but the duo is believed to have clocked higher ad revenues in FY23 compared to the previous year despite global economic headwinds.
“With Flipkart and Amazon operating their own data management programs, advertisers have a better-quality audience as it involves actual shopping behaviours and transactional data and hence a shift in spends is being observed towards ecommerce players,” digital head of a global agency said.
India’s ecommerce sector, which is currently valued over USD 100 billion, is expected to reach USD 350 billion by 2030, consultancy firm RedSeer said in its 2021 report. The government’s own estimate pegs it at US$ 350 billion by 2030. Clearly, etailers are set to gain further.
When asked about their ad growth in the Indian market in 2023, the Amazon Ad official merely said, “While we don’t provide country specific breakdowns of our advertising revenue, we continue to work hard all over the world, including in India, to help advertisers achieve their business goals.”
Making ad dollars stretch further
In the face of economic headwinds and stagnant consumption, advertisers, including SMBs, increasingly tighten their ad budgets and rather seek to stretch their ad dollars further. Amazon’s advertising wing-Amazon Ads-has worked hard on the measurement front to help brands understand the impact of their total investment, officials said.
“At Amazon Ads, we work to understand the biggest challenges SMBs are facing, using this insight to develop ad products and solutions to help them reach and engage millions of Amazon customers at every stage of their shopping journey,” Sharma explains.
From awareness and consideration to purchase, we offer self-service tools like Sponsored Brands and Sponsored Products as well as Sponsored Display, which flex with customer intent to create useful shopping and discovery experiences, and help brands meet their goals, he noted.
The company runs a variety of webinars and workshops for SMBs to help educate them around their portfolio of ad solutions and give them guidance on how to get the best from their advertising investments. It also offers SMBs a range of advertising tools that are self-service and largely free.
Measurement is one of the advertising industry’s biggest challenges. Brands, especially SMBs, often struggle to understand how their multi-channel touchpoints impact their marketing investments. How is Amazon Ads working to help solve those issues?
“Amazon Ads is continually working to innovate with solutions that help advertisers to find more efficiencies and better insights. With Amazon’s Brand Lift studies, for example, we can help Amazon DSP advertisers quantify how their Amazon Ads campaigns are driving marketing objectives such as awareness, purchase intent and ad recall,” the spokesperson said.
Sharma underscored that the relevance of ads cannot be underestimated. “One way that advertisers are reaching their audiences in a meaningful way is by combining their first-party brand insights with first-party insights provided by marketplaces. Combining those two sets of insights is key in trying to make sure that audiences are seeing ads that are relevant and feel authentic to their shopping experiences”, he noted.
On average, brands that reach audiences based on Amazon’s first-party behavioral and demographic signals resulted in a 38% increase in consideration compared to demographics alone, the spokesperson claimed.
New ad formats
Apart from its DSP and its partnerships with third-party publishers, Fire TV and Alexa that enable advertisers to amplify their message, the e-tailer has also rolled out an innovative ad solution “on-box” in the Indian market.
The on-box advertising campaign involves converting delivery boxes into branded packaging with an experiential component to engage customers.
According to Sharma, the company has received positive response from its advertisers to these offerings.
Indian exporters on the Amazon Global Selling program are on track to cross $8 billion in cumulative e-commerce exports by the end of 2023. Notwithstanding, the company has pledged to digitize 10 million SMBs, enable $20 billion in e-commerce exports, and create 2 million jobs in India by 2025.
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