Amazon steps up real estate play

Amazon India might in the next one year be the occupier of more than 30 million square feet of real estate in India. At present, it has taken up close to 17 million square feet of space for its offices, data centres and fulfillment centres.
 
The company, however, is tight lipped on its expansion. “As policy, we do not comment on future plans. However, as India’s largest and fastest-growing e-commerce player, and with a long-term commitment to make e-commerce a habit for Indian customers, we continue to invest in the necessary technology and infrastructure to grow the entire ecosystem,” the company said in a statement. 
 
According to experts, the company is going to follow a mixed model of real estate ownership, which would include taking some space on lease and buying in other cases. Insiders believe Amazon could soon be at par with some of the biggest software companies in India in terms of real estate take up.
 
Experts believe that the next phase of expansion would come from taking space for setting up new data centres. As a part of its commitment to invest $5 billion in India, Amazon had last year launched its first set of India data centres in Mumbai to cater to cloud computing services. 
 
The company, which is planning to increase the client base for its cloud network Amazon Web Services (AWS), is planning to take up more space for setting up data centres. At present, it has over 80,000 companies using AWS cloud.
 
“Amazon would be a key user of the data centres. It will potentially buy and develop its own data centres. They have done that in India and elsewhere in Asia. They do a combination of the ownership structures. People do not typically do one ownership structure, they look at spreading the risk,” Tom Duncan, executive director and regional lead for CBRE’s Asia Pacific Data Centre Solutions.  
 
The company is also expanding its fulfillment centre footprint. At present, it has over 13 million cubic feet of space in 41 fulfillment centres in 13 states. Amazon, which is now concentrating on making sales of big appliances easier, is also looking at setting up large appliances-only fulfillment centres throughout the country.
 
Manish Tiwary, vice-president, category management, Amazon India, in a recent interview with Business Standard had hinted that the company was actively looking at setting up more fulfillment centres for big appliances.
 
“We have only big appliances fulfillment centres. At present, the number stands at 12. It is a huge investment and a parallel network that is running alongside the normal fulfillment centres. We are running out of space, I am sure we will ramp up space eventually,” Tiwary had said. According to sources, the number of fulfillment centres by April 2018 could be around 45. 
 

Amazon, with close to 50,000 employees in India, is also rapidly expanding its office space. It plans to occupy close to 7 million square feet of office space in the next few months. At present, it occupies close to 3.1 million square feet in India, which is four times that of Flipkart’s 700,000 square feet.
 
According to experts, Amazon’s rapid expansion is its way of showing its seriousness for the Indian market. “It shows that for Amazon, India is its last bug frontier. With so much of real estate being taken up by the company only cements the belief that they are here for the long run,” said Amarjeet Singh, partner, tax, KPMG India.