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Amazon Acquisition Advances Indian Social Commerce

Amazon is leaping into social commerce with the acquisition of Indian startup GlowRoad.

Social commerce marks a newer arena for Amazon, which has prioritized investments in everything from video content, robotics and live streaming to grocery and home security. It most recently announced it would invest $1 billion into new supply chain technologies, and will also expand its 200-million-member strong Prime delivery program to companies outside its marketplace, which will be known as “Buy with Prime.”

But with Accenture the latest firm to predict a social commerce boom in the years ahead as consumers increasingly browse mobile-friendly platforms like TikTok and Instagram to seek out their favorite brands, Amazon might be reading the tea leaves.

Accenture estimated that sales made through social media platforms would expand at a compound annual growth rate of 26 percent and reach $1.23 trillion by 2025—a 150 percent increase compared to last year’s $492 billion.

GlowRoad’s business is focused on resellers such as temporary workers, unemployed people or students who are looking to earn income by working at home. The company enables suppliers to sell their products to end customers through resellers across more than 20,000 pin codes (similar to a U.S. zip code) in 2,000 cities.

Consumers can get these products at wholesale prices and resell them on Facebook and WhatsApp. GlowRoad also provides them with a logistics network to deliver the products and collect the cash. On its website, the startup says it has built a network of more than 6 million resellers who earn a monthly average of 35,000 Indian rupees ($460).

A reseller selling 100 products a month can earn around 20,000 Indian rupees ($260) per month. While resellers typically look for bulk buys, GlowRoad allows single-item purchases.

Amazon, which has made sizable acquisitions in recent years including the $13.7 billion Whole Foods deal in 2017 and the $8.5 billion MGM Studios acquisition that just closed one month ago, purchased GlowRoad for undisclosed sum in a reportedly all-cash deal. GlowRoad was last valued at approximately $75 million in a 2020 $7 million funding round.

The e-commerce giant quietly acquired U.K.-based e-commerce fulfillment provider Veeqo in November. It wasn’t until other reports surfaced that Amazon acknowledged the acquisition and let Veeqo break the news.

It acquired e-commerce platform Selz a year prior to gain a company that builds tools to help businesses launch their own online stores and add online payment options to existing websites. Like the Veeqo deal, Selz made the announcement on its own website and disclosed very few details.

Even its June 2020 acquisition of autonomous delivery provider Zoox, which went for approximately $1.2 billion, has gone under the radar.

The GlowRoad deal feels different for Amazon given that the social commerce tech provider is based in India, a nascent market where it looks to gain share.

“Amazon continues to explore new ways to digitize India and delight customers, micro-entrepreneurs and sellers and bringing GlowRoad onboard is a key step in this direction,” an Amazon spokesperson told Sourcing Journal. “Together with GlowRoad, Amazon will help accelerate entrepreneurship among millions of creators, homemakers, students, and small sellers from across the country. This acquisition will complement GlowRoad’s already loved service with Amazon’s technology, infrastructure, and digital payments capabilities, bringing more efficiency and cost-saving for everyone. This is a step further in Amazon’s commitment to digitize 10 million local Indian businesses by 2025.”

Amazon’s efforts in India have been mired in controversy over the past year due to reports that the company’s business practices haven’t been favorable to Indian small businesses. Amazon pledged $1 billion to help get small businesses off the ground in 2020.

A February 2021 Reuters investigation detailed Amazon’s actions from 2012 from 2019 to skirt India’s strict e-commerce regulations, including publicly misrepresenting ties with its major sellers Cloudtail and Appario (both of which were discovered to be Amazon joint ventures) and giving preferential treatment to a small seller subset. Amazon denied the claims, calling them “unsubstantiated, incomplete and factually incorrect.”

Amazon also is embroiled in a never-ending court battle to prevent the merger of India’s largest retail conglomerate, Reliance Industries, and Future Retail Group, in which Amazon has a minority stake. On top of that, the e-commerce giant is also fighting the nation’s top anti-competition watchdog, the Competition Commission of India (CCI).

The Indian regulators have become wary of American and other foreign-operated tech firms, also namely Walmart-owned Flipkart, in an effort to build a commerce environment where smaller, domestic players are given a leg up.

India’s current e-commerce regulations are designed to prevent foreign online retailers from both holding inventories of goods and selling them directly to customers. Instead, they must only collect fees from vendors selling products on their marketplace. E-commerce marketplaces, regardless of origin, also cannot mandate that merchants sell any product exclusively on their platforms.

These regulations could encourage Amazon to build a more diversified platform that could potentially drive more sustainable long-term success in India.

GlowRoad’s team of approximately 170 employees will join Amazon and the entity will continue to be run as an independent unit when the deal closes.

Sonal Verma, Kunal Sinha, Nitesh Pant, Shekhar Sahu and Nilesh Padariya founded GlowRoad in 2017 and cumulatively held close to 50 percent of company shares prior to the acquisition, with Verma and Sinha owning a larger portion than the latter three.

The business has raised more than $31 million to date, from marquee investors like Accel, Korea Investment Partners, Vertex Ventures, CDH Investments and RB Investments. Accel is the largest shareholder in the company, with a nearly 19 percent stake, according to business intelligence platform Tracxn.

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