Amazon to invest $2b in India; on track to hit $1b sales

E-commerce giant Amazon on Wednesday said it would invest $2 billion in the country to grow the business in a market that is dominated by homegrown players like Flipkart and Snapdeal.

The US-based firm’s announcement comes less than 24 hours after rival Flipkart announced raising a whopping $1 billion funding, the largest in the e-commerce space in India. Amazon, which launched its marketplace in India last year, said the country is one of its fastest growing markets and is on track to touch $1 billion in gross sales.

It will invest an additional $2 billion to support its rapid growth and continue to enhance the customer and seller experience in India, Amazon said in a statement.“After our first year in business, the response from customers and small and medium-sized businesses in India has far surpassed our expectations,” said Jeff Bezos, founder and CEO of Amazon.Com.

The company sees huge potential in the Indian economy and for the growth of e-commerce, he added. “With this additional investment of $2 billion, our team can continue to think big, innovate, and raise the bar for customers in India,” he said. At current scale and growth rates, India is on track to be Amazon’s fastest country ever to a billion dollars in gross sales, he said. “We have never seen anything like this,” Bezos said. In India, Amazon sells over 17 million products across categories like books, apparel and electronics from a growing base of thousands of small and medium-sized businesses.

Apart from smaller e-commerce portals, Amazon competes head on with Flipkart and Snapdeal. In the past few months it has raised the bar with introducing same-day delivery and ramping-up its logistics among others.

Earlier this week, Amazon said it will open 5 new centres across India in addition to its two fulfilment centres (FCs) in Mumbai and Bangalore. The FCs will be set up in Delhi, Chennai, Jaipur, Ahmedabad and Tauru (outskirts of Gurgaon).

This, it said, would help in faster delivery of products. With the addition of the five centres, Amazon’s total storage capacity will almost double to over half a million sq feet. Amazon did not specify the timeframe in which it will invest $2 billion in Indian operations.

last week, Amazon announced a wider net loss of $126 million in the April-June quarter of 2014 compared with a net loss of $7 million in the year-ago period.

However, its net sales increased 23 per cent to $19.34 billion in the second quarter, compared with $15.70 billion in second quarter of 2013.

For the period ended June 30, 2014, Anmazon’s cash and cash equivalents stood at $5.07 billion.

Players in the e-commerce market have been aggressively investing in infrastructure and logistics to improve delivery time and quality of service to woo more customers. Both Flipkart and Snapdeal, in the last few weeks, have opened centres to ensure delivery within 24 hours.