That India is one of Amazon’s prime markets globally is well-known. The Seattle-based e-commerce giant has made sustained investments in India since it entered the market in 2013, and is now the country’s second-largest online retailer trailing only Flipkart. The company has reportedly made another fund infusion, this time in its core local unit Amazon Seller Services, thus taking its overall investment in India to $2 billion.
It not only makes Amazon the second-biggest foreign investor — Japanese telecom and investment giant Softbank leads with $4 billion in investment — in India, but also gives fillip to its plans to grow ‘Prime’. The investment comes right ahead of Amazon’s first Prime Day sale for Indian customers. A Forrester analyst told ET that Amazon is serious about developing original content for Prime Video in India, and much of the fresh capital would be directed towards that. ALSO READ: Amazon Prime Day Sale starting in India on July 10: Discounts, offers and more
Part of the fund infusion could also be towards strengthening its merchant network ahead of the festive season in September-October, which is usually the most lucrative period for retailers. “These infusions will continue in a six to nine month interval for Amazon India to take on competition for the next two to three years,” the Forrester analyst told ET.
Amazon India is also looking to beef up its logistics and warehousing departments, and this is well-timed considering a new tax reform has just rolled out. Under GST, online retailers have to pay one unified tax for warehouses across the country as opposed to the differential state-wise rates they were charged earlier. That would compel Amazon and other e-commerce operators to maintain warehouses in only certain locations, thus putting pressure on the supply chain. ALSO READ: GST: Relief for Amazon, Flipkart as government defers implementation of tax at source
Amazon chief Jeff Bezos has always been bullish about India — Asia-Pacific’s fastest-growing e-commerce market. Most recently after meeting Indian PM Narendra Modi in the US, Bezos tweeted, “Terrific meeting with @narendramodi. Always impressed, energized by optimism and invention in India. Excited to keep investing and growing.” ALSO READ: Narendra Modi meets CEOs of Apple, Google, Amazon; urges them to invest more in India
India is particularly important for Amazon because the company failed to win China, where its march was checked by Chinese internet giant Alibaba. Hence, in order to win Asia, Amazon has to dominate India. As domestic players like Snapdeal crumble and market leader Flipkart struggles to find the right balance between topline and bottomline, Amazon is successfully making inroads into the minds of customers as well as merchants. It’s only inevitable that it would lead India’s online retail market in the future.