Image Source: Asia Times
Aug 14, 2018
Amazon is ensuring to keep the leads by keeping up the fast pace of investments in its India business, because it does not want to be back footed due to the massive $16 billion deal between Flipkart and Walmart, which will add a further $2 billion to the Indian firm’s war chest.
Jeff Bezos, CEO of Amazon, has committed to invest $5.5 billion into the India business and that figure is upcoming quickly. Amazon says over half of the capital it has invested in India so far has gone towards building infrastructure, including investments in technology, warehousing, logistics, etc. While the company does not admit it, a lot of investment has also gone into discount.
Earlier this month Amazon Seller Services, the marketplace unit of the US online retail giant in India, received an infusion of Rs. 27 billion (approx. $385 million), according to documents filed with the Registrar of companies (RoC) which were sourced from business intelligence platform Paper.vc.
Amazon has invested a further Rs. 1 billion in Amazon Retail India, the food retail unit of the company which will drive its grocery category. Amazon had said that it would invest $500 million into food retail soon after the government opened the sector up to 100 foreign direct investments.
This investment in Amazon’s marketplace unit comes just three months after it infused Rs. 26 billion into the unit, and takes the total investment the company has made in its marketplace business close to $3.7 billion.
In the past one year, Amazon has also made noteworthy investments in its loyalty programme Prime, which not only call for more money to be spent for logistics to enable faster deliveries, but also for the creation of original content that goes up on Prime Video. The US firm had said that it would invest as much as $300 million to create India-specific shows over the next few years.
Apart from its core e-commerce marketplace, Amazon is also investing heavily in its cloud computing, payments and even its IT services divisions in India. Counting the money that has come into these businesses, Amazon’s investment in India ticks over $4 billion according to industry analysts.
Besides, Amazon’s investments in India are expected to steadily increase over the next few years, which is increasing steadily in India and any loss the company makes in India might not show up as prominently on Amazon’s balance sheet. For the three months that ended June, Amazon reported a loss of $494 million from its international business, the third consecutive quarter-on-quarter drop, even as the company continues to ramp up its investments in India.