Business, Investments

Ecommerce Battle Gets Stiff – Amazon to Invest USD 2 Billion in India

After Flipkart raised USD 1 billion for its Indian market, now Amazon also announced that it will invest USD 2 billion to support its growth in India. It had opened its Indian website in June, last year, launching same day delivery and adding new product categories.

“With this additional investment of $2 billion, our team can continue to think big, innovate, and raise the bar for customers in India,” Chief Executive Jeff Bezos said in a statement. “We see huge potential in the Indian economy and for the growth of e-commerce in India.”


See Also: Amazon Launches a 3D Printing Store

The company is also planning to open five more warehouses to raise its presence in the country. Also, it has  two warehouses in Mumbai and Bangalore. More than 17 million products are sold on its website including books, electronics and clothing, which acts as a distributor for thousands of small and medium-size businesses.

“At current scale and growth rates, India is on track to be our fastest country ever to a billion dollars in gross sales.” states Jeff Bezos.

Reuters says:  Of the $13 billion market, travel services account for about 70 percent, according to consultancy Technopak. The type of goods sold through Amazon made up $1.6 billion of the total last year, according to researcher Forrester, and Technopak expects that figure to swell to $76 billion by 2021.

By comparison, e-commerce sales in China are likely to surpass $180 billion this year, according to researcher eMarketer.

“It’s all about who builds up scale faster and remains relevant for the next few decades,” said Harminder Sahani, managing director of retail consultancy Wazir Advisors.

DNA India says: Amazon is clearly pulling its socks up to face competitors like Flipkart and Snapdeal head on.

With the $1 billion investment, Flipkart will be dropping the plans of an initial public offering and might approach the markets after the current stage of expansion and consolidation is complete.

But Snapdeal might be planning an IPO, though it might list in the Wall Street to fund its expansion. And it has Ebay as an investor to back it up anyway.

WSJ says: Investors have been pouring money into India’s online retail market as e-commerce seems to at last be taking off in the country. Brokerage Nomura expects online retailing in India to grow 11-fold to $23 billion in the next four years.

Amazon doesn’t sell products directly to customer as Indian law bars foreign direct investment in multibrand retail companies.

To get around the restrictions Amazon allows merchants to use its website, storage facilities and logistics network to sell and deliver their products. Amazon makes money by charging those retailer fees for this service.

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