In order to further accelerate growth that the company has achieved lately, Amazon has decided to invest additional Rs. 1350 crore, which translates to around $200 million, in its India unit.
With this latest investment in the company’s Indian operations, as revealed by the regulatory filings on May 31, the total amount invested by the company in its India unit now stands at Rs. 8,618 crore.
The new infusion of money, that took place in the month of March, suggests that the company is determined to spare no expenses to accelerate its growth. It has access to the kind of money no other competitor has.
While Amazon can spend as much money as it wants for its India operations, the same is not the case with its rivals like Flipkart and Snapdeal, which are cutting costs and focusing on revenue generation due to slow-down in funding. This clearly gives an upper hand to Amazon.
This week marks completion of three years of eCommerce giant – Amazon in India. During this time period, it has acquired quite a big market share from its rival companies, which have been around for longer duration. In March, it was reported that Amazon is ahead of Snapdeal in terms of volume market share.
Recently, Amazon doubled its authorized capital to Rs. 16,000 crore as it had exceeded $2 billion which Jeff Bezos had committed to invest in Indian operations. This clearly indicates that Amazon is ready to infuse as much cash as possible, to be at the pole position in India.
During past six months, comparing data from Alexa shows that Amazon has had a consistent lead over Flipkart and Snapdeal in terms of traffic.
Since the company has already lost ground to homegrown Alibaba in China, it is important for the company to win the Indian market, which is one of the fastest growing economy globally.
Amazon began its India operations by allowing buyers to pay by cash, that too at the time of delivery, which is a novelty for the company. Recently, it has introduced a slew of initiatives for merchants.
The company has also built its own logistics network, along with 21 delivery or fulfillment centers owned by the company and another 50 owned by its sellers.
Recently, Government of India allowed 100% Foreign Direct Investment (FDI) in the eCommerce marketplace model. But, at the same time, it has restricted them to give heavy discounts to customers. It also states that no group company or seller on a marketplace can contribute more than 25% of the sales generated on the site. This may prove to be difficult to deal for Amazon and Flipkart which are selling on their platform through Cloudtail and WS Retail, respectively.
Bottom line is that Amazon India now has a huge advantage, thanks to Jeff Bezo’s commitment towards Indian operations, while Flipkart and Snapdeal and struggling to raise new capital.