Amazon India Builds D2C Future, Risks Marketplace

Amazon is encouraging its Indian sellers to establish independent online storefronts through a new initiative called SmartBiz. This program allows sellers to create code-free websites at no cost, leveraging Amazon's robust logistics and payment systems. The move comes as India's e-commerce landscape diversifies, with brands increasingly opting for direct sales channels over centralized marketplaces.

This strategic shift carries a potential risk of reduced high-margin revenue from commissions and advertising, estimated to be significant. However, Amazon is banking on embedding itself deeply within the burgeoning D2C sector, much like it did with Amazon Web Services (AWS). If successful, SmartBiz could establish Amazon not just as a retailer but as the critical infrastructure provider for Indian entrepreneurs, potentially outmaneuvering rivals like Shopify and ONDC.

The company plans to introduce a paid subscription model for SmartBiz after March 2026, with pricing anticipated to be competitive. This approach mirrors Amazon's strategy of lowering entry barriers with free or low-cost services to foster dependency before monetization. Sellers integrating deeply into SmartBiz may face substantial switching costs due to intertwined payment, logistics, and data flows.

India has witnessed a substantial growth in D2C channels, now representing an estimated 10-15% of online retail GMV. A notable shift by even a fraction of high-value sellers to D2C could impact marketplace revenues. While Amazon faces potential annual revenue losses of ₹1,000-1,500 crore from marketplace fees and ads, the long-term D2C infrastructure play is seen as crucial for future growth.