Amazon is looking at infusing a further $2 billion in the Indian market to take on the challenge posed by the recent acquisition of Flipkart by Walmart, CNBC TV 18 reported. The Jeff Bezos-led American e-commerce firm had earlier increased the investment in India to $5 billion.
“Amazon may start with increasing its investment target in India to $2 billion and increase it over a period of time,” the publication quoted a source as saying. However, no timeline has been decided for the investment so far, the source added, according to the report.
Amazon’s plans to boost its presence in India come on the heels of the $16 billion deal inked by American retail chain Walmart to buy 77 percent stake in Indian e-tailer Flipkart last month. “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of eCommerce in the market,” Doug McMillon, Walmart’s president and chief executive officer, had then said in a statement.
Amazon was also reported to have made an offer to buy 60 percent of Flipkart before the deal was clinched by Walmart.
However, Amazon is still keeping its eyes firmly on the Indian e-commerce sector. “Amazon is betting big on the India market. It is evident that after Walmart’s acquisition of Flipkart, Flipkart’s ability to increase market share and India presence will increase,” CNBC TV 18 quoted another source as saying in its report. “Amazon has had its eyes and ears firmly on the ground and has been carefully planning its strategy. India is one of its fastest growing geographies and Amazon will not be left behind,” the source added.
In 2016, Bezos announced that the company will increase its $2 billion investment in India by another $3 billion.“Amazon will invest $3 billion more in India. This is in addition to the $2 billion announced in 2014,” Bezos had said during a USIBC meet in Washington in 2016, which was attended by Indian Prime Minister Narendra Modi. “We have already created some 45,000 jobs in India and continue to see huge potential in the Indian economy,” he had added.
Of the $5 billion, Amazon is estimated to have already invested $3.3-$3.8 billion in India, the report added, citing industry experts.
Amazon India’s online marketplace has been said to be spending $120 million every month — $75 million on ecommerce and $45 million on its Prime subscription service, the Economic Times had reported earlier this year, citing experts. The amount is much higher than its average monthly cash burn rate of $80-100 million in 2016, the report added.
Amazon India is reported to have a valuation of $16 billion, with a market share of 30 percent.
Meanwhile, on the occasion of the firm’s fifth anniversary in India, Bezos posted a letter to its consumers in the country on the Amazon India website.
“On our fifth anniversary in India, I want to say thank you for your support and for making Amazon.in the most visited shopping site in India for the last two years,” Bezos said in the letter, adding that customers from 100 percent of serviceable pin codes in India have placed orders on the ecommerce platform, thanks to local innovations such as Udaan and I Have Space. “We’re five years into our journey, but as we say here at Amazon, it’s still Day 1, and I’m energised and humbled by the opportunities ahead. Amazon.in is ‘India ki apni dukaan‘,” he added.