Amazon's India launch may be limited: report (Reuters)

(Reuters) ? Amazon.com Inc's highly anticipated entrance into India's retail market may be limited to operating an online marketplace for other merchants, the Times of India reported Thursday.

The world's largest Internet retailer may launch Amazon Marketplace, an online platform that will connect shoppers with third-party retailers -- similar to rival eBay Inc's approach, the newspaper said.

The company could be in India by the first or second week of February, the newspaper added, citing unidentified people familiar with Amazon's plans. An Amazon representative did not respond to a request for comment on Thursday.

Amazon is stepping up its international expansion as the company tries to maintain the torrid rate of growth of recent years. India, with more than 1 billion people and a fast-growing economy, would be an attractive location for the Seattle-based company.

Restrictions on overseas multi-brand retailers now effectively exclude giants like Wal-Mart Stores and Amazon from the $550 billion Indian retail market.

"There's the regulatory handicap that Amazon has to work around," said Scott Tilghman, an analyst at Caris & Company.

Some restrictions on foreign direct investment in India's retail market were lifted recently, and there may be more curbs loosened, the analyst said.

Entering India with an online marketplace or "aggregator" approach will help Amazon "get their feet wet and keep their eyes and ears on the ground," Tilghman said.

Amazon has a thriving online marketplace in the United States and other countries that accounts for about 40 percent of the company's revenue, Tilghman estimated.

Rolling this out in India will get Amazon into the country, without some of the higher costs associated with opening a full retail operation, Tilghman said.

"It takes some of the pressure off by lowering the bar considerably on the financial commitment involved in entering that market," the analyst said. "They can rely more heavily on individual retailers that are already there."

Amazon shares were up 2.2 percent at $193.59 on Thursday afternoon on the Nasdaq.

(Reporting By Alistair Barr in San Francisco)

Source: http://us.rd.yahoo.com/dailynews/rss/asia/*http%3A//news.yahoo.com/s/nm/20120119/wr_nm/us_amazon_india

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