A Look at Amazon’s Growing Advertising Sales in India, China, and Across Asia

Amazon’s growing advertising business has raised a lot of eyebrows this year. The company said* it did about $2 billion in advertising revenue in the second quarter of 2018, and that number is generally expected to grow healthily as we approach the holiday season. Ad loads on Amazon search results pages appear very healthy, and Amazon has been attempting to make it easier for advertisers and agencies big and small to spend money on Amazon’s variety of advertising products by simplifying its advertising product branding.

We haven’t heard as much about Amazon’s advertising sales efforts in Asia, but we’re starting to. According to a report by India’s Factor Daily, Amazon ad sales in India are approaching $100 million (we assume this means annual run rate).

Online retailer Amazon has quietly built itself a high margin digital advertising business in India which is closing in on revenues of nearly $100 million, about 5% of money spent online by brands in India… “Amazon doesn’t have its own ad network and agencies don’t yet understand how to use advertising on an e-commerce platform,” said an Amazon executive who did not wish to be named as he is not authorised to speak to the press… Nearly 90% of Amazon’s advertising business in India currently comes from the programmatic and direct sales route.

Amazon is one of the most widely visited web services in India. According to Alexa.com (Amazon’s original and now lesser-known “Alexa” service, which tracks web traffic stats), Amazon.in is the fourth-biggest site in the country.

Ad loads on Amazon.in for popular queries are on par with those in the US. As one example, here are search results pages for “polo shirt” in India and the US, respectively (side note, Amazon private label brands are prominent in both search results as well):

Sponsored results for “polo shirt” on Amazon.in:

Sponsored results for “polo shirt” on Amazon.com:

Amazon continues to hire advertising support staff in Bangalore and Chennai, including those supporting advertisers in other parts of the world, such as Italy and China.

We’ve heard even less about Amazon’s advertising sales efforts in China, Japan, Singapore, and the rest of Asia. Anecdotally, ad loads for “polo 衫” on Amazon.cn show decent ad loads. But perhaps more telling of where Amazon hopes to go with its Chinese advertising efforts is Amazon’s current plans to ramp up its advertising sales staff in the country targeting Chinese advertisers.

Per Amazon.jobs, Amazon is hiring 18 advertising account executives and onboarding specialists out of its Shanghai and Shenzhen offices. These positions reflect the growing number of Chinese brands that Amazon is targeting to bring onto its platform – to reach customers both in China and around the world. Amazon is looking for people with, “Experience working with China-based brands.” As the listings state:

The Amazon Advertising team helps CN-based advertisers to reach Amazon customers globally: on Amazon, across our other owned and operated properties, on other high-quality destinations across the internet, and on millions of Kindles, tablets, and mobile devices.

In addition, Amazon’s onboarding specialsts are focused on helping Amazon’s self-serve/CPC advertising customers ramp up their efforts:

Sponsored Products and Sponsored Brands are cost-per-click (CPC) self-serve ad programs in the Amazon Advertising world. In support to the Amazon Advertising’s business, we at Ad Success Team (AST) are building a group of energetic and highly motivated Associate Onboarding Specialists. As an Associate Onboarding Specialist, you will be responsible to help equip them to identify the Advertising business opportunity, review their product listings, create advertising campaigns and help them adopt high value actions on their account to influence their success in advertising.

In Meguro, Amazon Japan is staffing up its ad sales efforts as well, including Head of Vertical Sales for Amazon Media Group, Manager of Campaign & Creative Management, and several Account Executives. Amazon is staffing Japanese advertising onboarding specialists out of Shanghai as well.

Meanwhile, Amazon is continuing to hire ad sales staff in the US (primarily in New York) and Europe (primarily in London, Paris, and Munich), managing accounts, self-serve advertisers, and continuing to build Amazon’s DSP operation.

* Notes on chart above and Amazon’s filings:

  • In 2017 filings, Amazon’s footnote on “Other” revenue said: “Includes sales not otherwise included above, such as certain advertising services and our co-branded credit card agreements.”
  • In 2018 filings, Amazon’s footnote on “Other” revenue said: “Primarily includes sales of advertising services, as well as sales related to our other service offerings.”
  • Starting in 2018, Amazon said it made an accounting methodology change that resulted in an increase in “Other” revenue of $560M in Q1 2018: “Service sales also increased by approximately $560 million due to the reclassification of certain advertising services that were previously classified as a reduction of cost of sales.”

Follow TJI as Amazon continues to evolve its advertising products and the way it works with advertisers and agencies around the world.

Amazon’s Great Indian Festival Deal Event Kicks Off with Many Discounts and Offers

While Amazon’s Prime Day deals event in July is watched closely by analysts and customers alike, Amazon also runs other deal events throughout the year in various parts of the world.

A few hours ago, Amazon kicked off its Great Indian Festival deal event in India. Timed with the start of the festival season, Amazon is offering steep discounts on electronics, appliances, fashion, and more, as well as special financing and rebates. The event opened for Prime members at 12:00 on 9 October, and everyone at midnight on 10 October. It runs through 15 October.

For example, Amazon is offering up to 40% off on select LG OLED TVs, up to 50% off on printers, and 40-90% off on select clothing items, in addition to substantial discounts on mobile phones.

As extra incentives, Amazon is offering 10% cash back up to INR 1000 on products above INR 6,000 as Amazon Pay balance. Customers can also choose no cost EMI on purchases above INR 3000 for SBI Card and INR 5000 for Bajaj Finserv. SBI Card customers receive an additional 10% instant discount on orders above INR 3000.

Amazon is offering some of the biggest incentives on fashion. Amazon is offering an extra 15% cash back on fashion purchases above INR 2000. It is also offering free delivery on the first order for some items to spur new customer signups.

Here’s the full list of Amazon Fashion offers during the event:

Like it has done during Prime Day, Amazon is making certain deals available only to Prime members, and it is offering deep discounts on its own hardware like Echo and Fire devices.

Amazon is also featuring deals on “Amazon Brands” — though in general we are not seeing Great Indian Festival deals featuring Amazon private label and exclusive brands as heavily as we did on Prime Day.

Amazon has created several private label and exclusive brands just for the Indian market like Vedaka and Myx. It also offers a large number of products under some of its global private label brands like AmazonBasics and Solimo.

Amazon is also driving significant media coverage of the event in India.

India is a strategic priority for Amazon, with intense competition from Walmart (Flipkart) and others. It launched Amazon Pay EMI  in India few weeks ago, and is also reportedly looking to sell life and health insurance in India. Amazon and Samara Capital teamed up to buy the More chain of retail grocery stores in India three weeks ago as well.

Follow TJI to track the latest on Amazon’s efforts in India and around the world.

Amazon, Samara Acquire “More” Retail Grocery Chain in India

Further its investment in India, Amazon and Indian private equity firm Samara Capital have acquired the More chain of retail grocery stores in India from Aditya Birla Group.

Samara will buy 51% and Amazon will buy 49%, to avoid regulatory restrictions that apply in situations of foreign majority-ownership. The total price was about USD $580 million. Per BusinessToday.in,

The deal will take care of ABRL’s debt that stood at Rs 4,000 crore as of March 2018. Once the process is complete Samara Capital and Amazon plan to rapidly expand the chain which was put on hold due to its burgeoning debt. They plan to set up 100-150 stores every year including neighbourhood supermarkets and hypermarkets. The plan for the current fiscal is to set up 90 stores.

Our take:

Amazon is continuing to heavily invest in India. India is a strategic growth market for Amazon, with intense competition from Walmart’s Flipkart and others. Owning (almost a majority of) a retail grocery chain will give Amazon a physical footprint through which it can accelerate the deployment of other services in the country.

Amazon Wants to Sell Life and Health Insurance in India

Amazon is in the process of registering with Indian regulatory authorities to sell life, health, and other insurance to consumers there. Per Bloomberg Quint:

Amazon India wants to start by selling life, health and general insurance, according to its filings with the Registrar of Companies. The Seattle-based giant said it aims to carry out the business of soliciting, procuring and servicing insurance as a corporate agent…

Amazon has yet to seek an approval from the Insurance Regulatory and Development Authority, a person in the know told BloombergQuint requesting anonymity. A company spokesperson, in an emailed response, however, confirmed the plan, saying Amazon Pay is looking to “serve the needs of customers around insurance. Stay tuned”.

Our take:

India is a strategic growth market for Amazon, with intense competition from Walmart’s Flipkart and others (Flipkart is in the process of seeking approval to sell insurance as well). Like with its new Amazon Pay EMI service, Amazon has consumer data that should help it to assess risk and lower fraud rates. Amazon is also rumored to be exploring the insurance markets in the US, UK, and other countries as well.

Amazon Launches Amazon Pay EMI in India

In an effort to extend credit to millions of Indians without credit cards or other desirable methods of short-term financing, Amazon has launched Amazon Pay EMI (“Easy Monthly Installments”) in India through a partnership with Bengaluru-based Capital Float. Per the Economic Times of India:

“Our aim is to target the next 70 million customers who are deprived of credit options while shopping on Amazon, they will be significantly benefitted by these easy EMI options especially with the festive season round the corner,” said Vikas Bansal, director, emerging payments at Amazon Pay…

“The advantage that Amazon can bring in is the huge customer base that we already have here, hence customer acquisition cost will be lower and we can pass off better rates to good borrowers,” said Bansal. “Also we will use our machine learning capabilities to reduce frauds which will also make loans cheaper.”

Amazon claims to be offering zero cost EMIs for customers taking the loan for a duration of three and six months. For those opting for the duration of nine and 12 months the rate of interest will be 18%.

Our take:

India is a strategic growth market for Amazon, with intense competition from Walmart and others (Flipkart is aggressively pushing its Debit EMI product as well). Amazon has consumer data that should help it to assess credit risk and lower default and fraud rates. Extending credit to Indian consumers should help increase cart size and share of wallet.