Amazon India is strategically betting big on advertising and quick commerce (q-comm), transforming its platform into a hybrid of retail and advertising powerhouse. The company's advertising revenue has seen substantial growth, and its foray into quick commerce with "Amazon Now" is creating new avenues for revenue generation and customer engagement.
The Rise of Advertising Revenue
Amazon India's advertising income surged by 24% to reach ₹8,370 crore in FY25, according to regulatory filings. This growth highlights the increasing importance of advertising as a revenue stream for the e-commerce giant. In FY24, Amazon's ad revenues already surged past ₹6,600 crore, while rival Flipkart crossed ₹4,900 crore. Together, they accounted for nearly a quarter of India's digital ad market. Retail media is now the fastest-growing area in Indian advertising, and Amazon India's advertising has become the second largest revenue source after marketplace services, contributing nearly 28% of its operating base.
Several factors contribute to this surge in advertising revenue. Firstly, the increasing internet penetration and the growing trend of online shopping in India have expanded the potential audience for advertisers on Amazon. Secondly, Amazon's enhanced ad tech capabilities, including investments in AI and machine learning, have enabled the platform to offer innovative ad formats and precise targeting. This allows brands to reach consumers with a high purchase intent, leading to better conversion rates.
Quick Commerce as the New Billboard
Amazon is also aggressively expanding its quick commerce vertical, "Amazon Now". Following initial success in Bengaluru and Delhi, the ultra-fast delivery service has recently been rolled out in Mumbai. The service promises deliveries within 10 minutes of a wide range of products, including groceries, daily essentials, personal care items, and electronics.
The company plans to add hundreds of micro-fulfillment centers across Bengaluru, Delhi, and Mumbai to support this expansion. Samir Kumar, VP and country manager, Amazon India, stated that the response to Amazon Now has exceeded expectations, with daily orders growing at 25% month-on-month and Prime members tripling their shopping frequency after using the service.
Amazon's entry into the quick commerce space is a strategic move to capture a larger share of the rapidly growing instant-delivery sector in India. The quick commerce industry in India is expected to cross $6 billion in annual sales. By offering ultra-fast delivery, Amazon aims to enhance customer convenience and loyalty, further driving traffic and sales on its platform.
Quick commerce platforms are becoming increasingly attractive to advertisers, with some projecting Q-comm ad revenues to cross ₹5,000 crore by 2025. Gopa Menon, COO & Co-founder at Theblur, noted that quick commerce alone generates 50 percent of Amazon India's ad revenue, demonstrating how rapidly new formats can scale. The high conversion rates of quick commerce, with a 30 percent click-to-conversion rate compared to 10 percent for Amazon, make it an appealing advertising channel for brands.
Challenging the Status Quo
The rise of Amazon's advertising business and its expansion into quick commerce are reshaping India's digital ad economy. By offering a combination of scale, data, and accountability, Amazon is challenging the dominance of traditional digital advertising players like Google and Meta. As retail media continues to grow, Amazon is well-positioned to capture a larger share of the market and provide brands with new and effective ways to reach consumers.
Amazon's strategic focus on advertising and quick commerce reflects its commitment to innovation and customer-centricity. By leveraging its vast reach, data, and technological capabilities, the company is transforming its platform into a comprehensive ecosystem that benefits both consumers and advertisers. As the e-commerce landscape in India continues to evolve, Amazon's big play in ads and q-comm is likely to have a significant impact on the future of digital advertising and retail.
