In a recent emerging consumer survey conducted by Credit Suisse, the Swiss multinational forecasts the e-commerce market in eight countries – India, Indonesia, China, Brazil, South Africa, Mexico, Russia and Turkey – will grow from $1 trillion in 2016 to $2.5 trillion by 2025. Of these eight countries, Amazon (AMZN, Financial) operates in half of them: India, China, Brazil and Mexico.
Amazon’s position in China has always been on the fringes as the country’s e-commerce market is dominated by Alibaba (BABA, Financial). Of the emerging market group, India, Brazil and Mexico are the only three markets where Amazon has a chance to make a meaningful impact. Internet penetration has been the biggest headache for e-commerce companies in these countries, but in the last five years the numbers have significantly improved and will continue to improve over the next several years.
Amazon recently snatched the No. 1 player’s crown from rival Flipkart in the fast-growing market, India, while it keeps improving its operations in Brazil and Mexico.
According to a recent study published by the Brazilian Chamber of Electronic Commerce, the e-commerce segment ended 2015 with $10.3 billion (41.3 billion Brazilian reals) in earnings, an increase of 15.3% compared to 2014. Despite the current economic scenario in Brazil, projection for 2016 is still positive (8.6%), reaching $11.15 billion, as e-commerce is an attractive way for Brazilians to make purchases. – Export.Gov
Combined revenues from all three countries won't even get close to what Amazon makes from the U.S., but it must be noted that these are developing countries with significant room for their respective e-commerce markets to grow as internet penetration keeps expanding.
It’s nearly impossible for competitors to dent the No. 1 player’s position in any market because the leader’s volume is constantly on the rise, further attracting buyers and sellers to its platform. This is the reason why Amazon is nearly untouchable in the U.S. market, and Alibaba remains untouchable for Amazon in the Chinese market.
If Amazon can reach the top spot in India, Brazil and Mexico, the three developing countries will keep feeding Amazon for many years to come.
Disclosure: I have no positions in the stock mentioned above and no intention to initiate a position in the next 72 hours.
