By CCN Markets: Forget New York City. Amazon just cut the ribbon on its real HQ2, and it’s located 8,000 miles away.
Hyderabad, the largest city in India’s state of Telangana, is now the home of the largest Amazon campus anywhere in the world. The 1.8 million-square-foot office park – which is the first that Amazon owns outside the United States – sits on a piece of land measuring three million square feet.
— Amazon India News (@AmazonNews_IN) August 21, 2019
Low online retail penetration
According to Bloomberg, Amazon’s Hyderabad campus will house approximately 15,000 workers. This is part of the online retail giant’s plans to expand in the world’s second-most populous country, which boasts a young population and an underdeveloped e-commerce sector.
Amit Agarwal, Amazon’s country manager for India, said that online retail penetration currently languishes in the low single digits:
“E-commerce is so small in India relative to the total consumption, less than 3 per cent.”
Traditional retail, in contrast, boasted a penetration level of 88 percent as of 2017.
According to the Times of India, fewer than 100 million Indians have shopped online, even though 500 million have internet access. Fewer than 50 million shop online regularly.
But by 2020 the number of online shoppers in India is expected to increase to 200 million, presenting high growth opportunities for e-commerce firms.
Compared to India, Amazon’s home market of the United States is relatively saturated, with the online retail market taking up nearly 13 percent of total retail sales.
Amazon Launches Hyderabad HQ2 to fight off competition from rival Walmart
Besides online retail operations, the Hyderabad campus will also be involved in building global products for the mother brand, including Alexa and Kindle.
The opening of the “Asian HQ2” comes at a time when competition between Amazon and Walmart has intensified in India.
Following Amazon’s success with Prime Video in India, which has been extended to producing local film and TV content, Walmart is planning to try the same trick.
Per The Verge, Walmart is planning to unveil a new video streaming service for Flipkart Plus subscribers. Walmart acquired Flipkart last year at a price of $16 billion.
As of 2017, Flipkart was the ninth biggest global marketplace by sales, per Internet Retailer. Amazon ranked third.