Mr Bezos goes to Hollywood… by way of Hyderabad

Amazon started out with Jeff Bezos selling books from his mum and dad’s garage and he warned his investors that there was a 70% chance of the company failing, but the world’s richest man is now at the helm of a corporate monolith and he has just spent $165 Million for a house in Beverley Hills: the most expensive residential property of its kind in California’s glitzy, dollar scattered history. And for that kind of money you could buy 4,715 houses in Hyderabad which is enough to put up a third of the 15,000 employees who will now be employed at Amazon’s nine acre Campus in the City’s financial district: the biggest of its kind in the world.

Of course, Hyderabad has long nurtured an ambition to emulate the Bezos heartland of California’s Silicon Valley, so it’s hardly surprising it should now feature so prominently on his radar: Oxford Economics predicted this year that within the next decade all ten of the world’s fastest-growing cities will be in India, and among this select grouping Hyderabad is growing fourth fastest by GDP and is the second biggest technology hub on the subcontinent after Bangalore. 

It is unsurprising too that the sheer scale of Amazon’s new venture should be characteristically leviathan: the canteen can cater for 2,500 at a single sitting and a dozen new shopping malls are set to open in Hyderabad by June next year to cater for solitary geeks looking for quality shopping time away from the madding crowd: perhaps, like so many young Indians, to buy a new smartphone or (less likely) a book. As a result of the Financial District of Hyderabad currently resembles nothing so much as an enormous construction site with more and more hopefuls pouring into the City every day looking for work. There are new flyovers to relieve the traffic.

And for those lucky enough to get a staff pass to the canteen, there are suitably Amazonian touches to keep them amused during those late-night coding sessions: table tennis tables, Zumba classes, a Treadwall (whatever that is) and even a synthetic cricket pitch which might help visiting Americans understand what the World would be like without baseball and how to pronounce Sachin Tendulkar’s name properly (Donald Trump take note).

But there’s obviously more to Amazon’s decision than Treadwalls and cricket: Jeff Bezos didn’t become the world’s richest man without being able to recognise the planet’s fastest-growing retail and technology market when he sees it. Cisco Systems have had their calculators out and predict that by 2022 India will have a staggering 829 Million smartphone users compared with 199 Million in 2015: the exponential growth is breathtaking. Added to that online shopping is literally going viral on the subcontinent with some estimates putting the market as high as $200 Billion annually (up from $30 billion last year). 

With honey pots that big, international retail giants were bound to be jostling for a piece of the action and Amazon is just one of several currently putting down a (very big) stake in India’s future including, most notably, Flipkart (now owned by Walmart) and the Ambani owned Reliance Retail. Bearing in mind the subcontinent is still on course to become the most populous nation on the planet by 2022: much more middle class, with a younger demographic and much more money to spend, those stakes are only going to get bigger. 

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Executive Overview

The scale of Amazon’s latest investment in Hyderabad is truly breathtaking: as the article says, the Campus is now the biggest of any of the company’s anywhere in the world. But I think it is more important to ask why the investment has been made and why it has been made now.

In my view, it is clearly a response to explosive growth rates in the subcontinent’s on-line retail markets and there is every indication that these rates will not only be maintained but will accelerate over the next decade.

Watch this space…

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At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.

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