Amazon Now hits $1-billion run rate as Amazon takes quick commerce deeper into India

Amazon is stepping up its quick-commerce push in India, with Amazon Now crossing an annualised gross sales run rate of $1 billion as the e-commerce major rapidly expands the service beyond the country’s biggest cities.

Amazon, in its recent announcement, said that orders on Amazon Now have doubled every quarter since its launch, making it the fastest-growing e-commerce business in Amazon India’s history. In less than 10 weeks, the service has expanded to more than 60 cities and towns, with the company targeting 100 cities by Diwali.

Don't Miss: Q-commerce will become ‘much bigger’, says Amazon India VP and Country Manager Samir Kumar

The expansion marks a shift in Amazon’s approach to India’s quick-commerce market, where it had initially been a relatively late entrant. The company is now taking the proposition deeper into smaller cities, with Amazon Now available in locations including Padubidri, Tirupati, Guntur, Gurdaspur, Jalandhar, Vellore, Dharwad, Warangal and Berhampur.

Amazon Now currently operates through more than 750 micro-fulfilment and urban fulfilment centres. It offers groceries and daily essentials but is also positioning the service around a wider assortment, including personal care, fashion and beauty products, small appliances, and home and kitchen products.

“The good thing is the pace of the growth is significant,” said Satish Meena, from Datum Intelligence. The scale-up, he said, also suggests Amazon could be leveraging its existing customer base, particularly Prime customers, to drive adoption of the service.

That existing customer ecosystem could be important as Amazon expands beyond metros. Unlike a standalone quick-commerce platform that has to build customer traffic and fulfilment infrastructure market by market, Amazon can potentially tap customers who already shop on its platform.

In Case You Missed It: Amazon bets big on value commerce as Bazaar grows 5X year-on-year, expands beyond Tier-2 and Tier-3 India

The $1-billion figure, however, is an annualised run rate rather than actual sales generated over a year. Meena said the figure essentially extrapolates recent sales over 12 months, making the pace of growth more significant than the absolute number at this stage.

Amazon’s push is also coming with customer incentives. Meena pointed to cashback offers on Amazon Now, which could be helping drive order frequency and customer adoption. The extent to which such incentives contribute to the current growth will be important as the company scales and eventually seeks to improve the economics of the business.

The company has already laid out a much larger ambition. In June, Amazon said it planned to build India’s largest delivery-in-minutes network by taking Amazon Now to more than 300 cities.

The economics of that expansion will now come under greater scrutiny. While Amazon has the financial capacity to build the network over a longer period, quick commerce requires sufficient order density at the fulfilment-centre level to make the model viable.

“They have advantage of time. They can grow slowly because there's no pressure on them like Zepto,” Meena said.

That patience could allow Amazon to take a measured approach as it moves into smaller markets. But with the company targeting 100 cities by Diwali and 300 cities eventually, the next challenge will be determining whether the customer frequency, basket sizes, and fulfilment economics seen in larger markets can be replicated across a much wider geography.