Amazon goes one up on Flipkart, to invest $2 billion in India arm

Our Bureau Updated - March 12, 2018 at 08:47 PM.

Will focus on bringing down costs, ensuring fast and smooth delivery

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Whatever Flipkart can do, Amazon is promising to outdo. A day after India’s biggest e-commerce company announced that it had raised $1 billion (₹6,000 crore) in funding from private equity investors, the world’s largest online retailer said it was pumping in fresh investments of $2 billion (₹12,000 crore) in its Indian arm, Amazon.in.

“With this additional investment of $2 billion, our team can continue to think big, innovate, and raise the bar for customers in India,” Jeff Bezos, founder and CEO of Amazon.com, said in a press statement. Amazon will use the money to build more categories, bring down costs and facilitate fast and smooth delivery.

Battle of the marketplaces
Currently, the company offers over 17 million products on its portal. This, while operating as a marketplace and not as an e-retailer — India does not allow FDI in e-commerce entities. The company, therefore, does not sell products directly to customers. Instead, it allows vendors to use its website, warehouses and logistics facilities to sell products. Flipkart, too, follows the marketplace model.

Amazon, which launched its marketplace in June 2013, is out to dislodge the Bangalore-based company, launched by two ex-Amazon employees in 2007, from the No. 1 position.

Amit Agarwal, Country Head of Amazon India, said the company would keep investing in expanding the market without thinking about sales targets or profitability.

Still in the red Globally, while its sales have been rising, Amazon has been posting huge losses. In the April-June quarter, it posted a net loss of $126 million as against a loss of $7 million in the year-ago period.

Flipkart, which has so far raised ₹15,000 crore, is also yet to turn profitable. Analysts feel that the Indian e-commerce outfit’s gross sales will touch $3 billion this fiscal year. With the market pegged to touch $30 billion by 2020, the stakes are high.

Threat of more competition Sanjay Mehta, an angel investor, said that things could hot up further if Japanese e-retailer Rakuten enters the market.

The biggest winners are the consumers. They can expect big discounts as the e-commerce companies battle it out.

Published on July 30, 2014 05:07