Nearly a decade later, Amazon India’s report card is decidedly mixed, foreign brokerage Bernstein said in a report. India is often the dream prized market of many global internet companies, yet also one of the most challenging to unlock — just ask the Chinese apps.

“Who can forget Jeff Bezos’ 2014 visit standing on top of a colorful lorry announcing a $2 billion investment? But nearly a decade later, Amazon India’s report card is decidedly mixed,” the report said.

The country is one of Amazon’s biggest overseas markets and also one of its fastest growing with a best-in-class customer experience and large Prime customer base.

Yet this growth has come at a high cost of over $6.5 billion plus invested to-date while profitability remains elusive (-5-10 per cent EBITDA margins), the report said.

The company also faces immense competitive pressure in fast growing categories, a weaker value proposition in ‘New’ commerce, limited traction in tier 2/3 cities, and an unfavourable regulatory environment for outsiders, it added.

India is one of few large and under penetrated e-Commerce markets with retail penetration of only 5 per cent, well below the global average (14 per cent).

eCom spending is expected to 2x to $130 billion+ in GMV by 2025, with online shoppers projected to increase by 2x to 300 million. Growth is expected to be led by new online shoppers – primarily from tier 2/3 cities – and continued online migration of key categories, including fashion and grocery.

“Within grocery, we’re already seeing a shift from slow eCom to quick/instant delivery. In fashion ‘social’ commerce and D2C brands are gaining share,” the report said.

While India is a three-player market – Amazon, Walmart/Flipkart and Reliance’s JioMart – the market remains quite fragmented with meaningful market differences by market tier, product category, and distribution models. Amazon leads on core categories (consumer electronics, media) and has done quite well in tier 1 cities with 5 million prime subs, the report said.

Reliance leads in eGrocery/O2O categories with 15,000 store retail footprint and a stronger 1P model.

Flipkart has maintained leadership in the apparel category with 2x size of the nearest competition. But newer players like the Softbank-funded Meesho are winning the faster-growing tier 2/3 cities.