Inside Amazon's plan to expand its grocery business in India

Amazon.com Inc expects groceries and household products to account for over half of its business in India in the next five years, as it moves to broaden offerings in the segment and foray into areas such as fresh produce.

Amit Agarwal, the India head of Amazon, said in an interview on Friday that groceries and goods such as creams, soaps and cleaning products, were already the largest product category on Amazon in terms of number of units sold in India.

"I would not speculate on when we would launch AmazonFresh but, absolutely, if you ask me the next five years of vision - from your avocados to your potatoes, and your meat to your ice cream - we'll deliver everything to you in two hours," he said.

AmazonFresh, which launched more than a decade ago in the U.S. market, is the company's flagship fresh grocery delivery service. In India, Amazon currently offers some groceries via a service named Pantry. It has also tied up with local vendors in four cities for Amazon Now, which promises two-hour deliveries.

"Probably in the next five years groceries and consumables would be more than half of our business," he told Reuters.

Agarwal said Amazon had already started experimenting with a few fresh groceries in India, already home to its largest active customer base outside of the United States.

India's e-commerce market is tipped to grow to $200 billion in a decade, according to Morgan Stanley, as cheap mobile data makes online shopping increasingly accessible.

And Amazon, which already has over 100 million registered users in India, is looking to cash-in on the opportunity.

"We want to get the next hundred million customers shopping with us," said Agarwal, adding that Amazon plans to woo new clients with product exchange and staggered payment offerings.

Huge opportunity

With almost 500 million Indians using the Internet in 2018, India, Asia's No. 3 economy, is a huge e-commerce battleground.

Retail giant Walmart is inching closer to buying a controlling stake into home-grown e-commerce player Flipkart, which is already backed by big name investors like SoftBank, Tencent and Microsoft.

"I feel extremely excited that e-commerce is attracting so much funding," Agarwal said. "Otherwise, we'd have been wrong in going about it in such as big way."

Amazon's founder Jeff Bezos told shareholders in a letter https://bit.ly/2qGKiOl last week that Amazon India is the fastest growing marketplace in the country. He said Amazon added more members to its Prime loyalty programme in India in its first year, than any previous geography in Amazon's history.

Still profitability in India is years away for Amazon, admits Agarwal, as logistics, payments and other infrastructure needed to address the long-term opportunity are still being built.

He said the $5 billion Bezos had committed to investing in India was just a signal of intent, and the company was ready to invest significantly more to achieve its goals.

"Our ambition is so big it would be futile for us to think about anything other than to ensure we keep investing to bring the next 100 million customers online," Agarwal said.