WMT Walmart Inc

NEW DELHI–Amazon.com Inc. founder Jeff Bezos, perturbed by his company's failure to capture much of the massive Chinese market, had a pointed message for executives in India during a visit in 2014: Don't let that happen here.

Do what it takes to succeed and don't worry about the cost, Mr. Bezos said, according to a person who was present.

Amazon, which dominates online selling in the U.S. but so far has gained little traction in developing countries, has since invested billions of dollars to build a logistics network spanning India to reel in shoppers.

The result: the company rapidly became India's No. 2 e-commerce player and moved within striking distance of local rival Flipkart Internet Pvt., according to some estimates. Indeed, Mr. Bezos last month declared Amazon was on top in a market it largely had ignored until recent years, though he didn't say by which measure.

"We are winning in India," Mr. Bezos said at a conference in San Francisco, arguing that Amazon has pulled past Flipkart to become "the leader in India now."

Amazon's attempts to push into developing markets—marked by difficult logistics and significant cultural differences in shoppers' expectations—reflect the e-commerce giant's search for new routes to growth as it saturates the U.S. market. Countries such as China and India promise rapidly growing populations with steep rates of online shopping adoption as technology becomes more accessible.

India is a potential driver of profitability and growth for the company's international segment, which has lagged behind Amazon's domestic operations. International sales comprised about a third of Amazon's $107 billion in sales last year.

The company's progress in the South Asian nation so far is in contrast to its trajectory in China, where it is a distant also-ran to domestic players in the world's largest online-selling market, worth $899 billion. Amazon as of last year had just a 1.3% share of the total business-to-consumer market in China, according to a Daiwa Capital Markets report, citing data from iResearch.

This year's biggest Indian holiday-shopping season—Diwali, the Hindu festival of lights that began last month—could be a critical test as the company moves from catching up to taking over in the world's second-most populous country.

"This is probably an inflection point," said Amit Agarwal, Amazon's India head. "We have been investing very aggressively."

Amazon had missed the party in China by picking the wrong pace and partners as e-commerce took off. In India it decided to invest more even though the overall market was still small.

Amazon's experience in China taught the company the importance of "investing aggressively right from the beginning and having a very long-term orientation," Mr. Agarwal said.

India's e-commerce companies don't share their sales numbers, but analysts agree the results of Amazon's blitzkrieg are significant.

Bank of America Merrill Lynch estimates that by the end of this year Amazon will control about 28% of India's total e-commerce gross merchandise volume. That is still well behind market leader Flipkart's 43% share. But if you take away the sales of Flipkart's separate fashion website, Amazon's sales have been higher in recent months, says a report by Bank of America Merrill Lynch's Sachin Salgaonkar.

"We see potential for Amazon to emerge as the number one e-commerce platform in India," Mr. Salgaonkar wrote.

India, with a population of more than 1.2 billion, only has about 40 million online shoppers, according to Credit Suisse.

India also faces a severe gender gap when it comes to web access. Only about 30% of internet users are female, according to estimates by the Internet and Mobile Association of India.

Meanwhile, Amazon isn't the only one with deep pockets. Chief U.S. rival Wal-Mart Stores Inc. is in talks to invest in Flipkart.

Still, if Amazon's wager on India works out the country could become a pillar of the company's growth for years. While e-commerce sales in India remain relatively tiny, at about $11 billion, they are likely to grow 10 fold in a decade, Goldman Sachs estimates.

In 2014, Mr. Bezos stepped off a colorfully painted Indian truck in Bangalore in a white Nehru jacket to hand over a surfboard-sized $2 billion novelty check to Mr. Agarwal to expand Amazon's India operations. "We see huge potential in the Indian economy," Mr. Bezos said at a news conference.

Amazon has been bringing to bear its trademark weapons, such as a powerful search engine that can guess what customers are looking for and what they might buy next, and high-tech warehouse facilities that speed deliveries and cut costs. It also turned to new tactics to suit the Indian market, such as deploying swarms of motorcycle delivery men with huge backpacks and accepting cash on delivery for customers without credit cards.

Amazon has wooed hundreds of thousands of Indian small-business owners such as Bhavin Jagani, who runs a small kitchen-wares business in Mumbai. Amazon representatives taught him how to take products that weren't panning out on Amazon's competitors' websites and photograph and describe them in a way that would attract more customers on Amazon's intelligent search engine. "From losing money on other sites, I've started making money on Amazon," he said.

Amazon now has more than 80 million products on its India website. And Mr. Bezos has since doubled down on his India bet, pledging another $3 billion in investment in June.

Karan Deep Singh in New Delhi and Laura Stevens in San Francisco contributed to this article.

(END) Dow Jones Newswires

November 17, 2016 07:55 ET (12:55 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.