Amazon has invested an additional Rs 1,350 crore in its India unit this year, keeping no stone un-turned to accelerate the run for being the undisputed champion in Indian. In its regulatory filings as of May 31, it came into light that the latest investment in Amazon Seller Services, makes the total capital infused into the main India unit since early 2015 to Rs 8,618 crore. The money came in March, a few weeks before India introduced discounting and vendor-related restrictions for online marketplaces.
The investment gives an edge to Amazon, whose competitors are finding it difficult to manage and gain funds. According to experts, this money will now also be needed for additional compliance-related expenses. This week also marks Amazon’s three years in India, a duration in which it grabbed the significant pie of the market share. India is especially very important for Amazon, after it lost to Alibaba in China. The company in October said it expected India to overtake Japan, Germany and the United Kingdom to become its second-largest overseas market in a few years. Amazon Chief executive Jeff Bezos said in a statement, at the Code/Media conference in California when asked what lessons the company had learnt from China.-
“We have done much more local market customisation in India than we did in China,..I think some of the investors in India in the early days thought that India might be a replay of China and they have found out that it hasn’t gone that way,”
Experts tracking online retail say it isn’t new for Amazon to outspend competitors to dominate a market. Amazon in January made its largest single capital infusion into in its India unit at Rs 1,980 crore, a month after it sunk in Rs 1,696 crore. Kartik Hosanagar, professor at The Wharton School of the University of Pennsylvania says-
“This is only the tip of the iceberg,…While Flipkart and Snapdeal are struggling to attract new capital, the strategic commitment from Jeff Bezos gives Amazon India a huge advantage.”
Amazon India, however, has to deal with the new guidelines that bar any single merchant from accounting for more than 25% of the sales on an online marketplace and disallow any discounting led by the online platforms. Devangshu Dutta, CEO of retail consultancy Third Eyesight.
“The FDI policy has clear implications for Amazon’s growth,…It cannot depend on Cloudtail (Amazon’s leading merchant) to develop its presence beyond 25% of projected revenues, so it does create a huge push for other merchants and brands.”