Amazon Increases India Investment by $2 Billion
Amazon, which had previously committed $5 billion in India, is set to increase its investment in a fight with Walmart for the upper hand in the market.
A security guard enters an Amazon Fulfillment Center on the outskirts of Hyderabad, India, in September.Noah Seelam/AFP/Getty Images
Amazon is reportedly ready to invest an additional $2 billion into its operations in India, after it lost acquisition of a local competitor in May.
Amazon had previously committed $5 billion to the Indian market, and its increased investment comes as the company lost to Walmart in its bid for Indian e-commerce company Flipkart, with $12 billion as opposed to the $16 billion Walmart offered, according to CNBC.
Citi Research last month estimated Amazon's total India market to be worth $16 billion. And in 2016, Amazon CEO Jeff Bezos increased the company's investment in India from $2 billion to $5 billion. At that time, Bezos explicitly mentioned his goal to rapidly expand both investment and employee growth in the emerging market.
"Amazon will invest $3 billion more in India. This is in addition to the $2 billion announced in 2014," Bezos said at a U.S.-India Business Council meeting in Washington in 2016. "We have already created some 45,000 jobs in India and continue to see huge potential in the Indian economy."
While there are no confirmed reports on how much of the $5 billion has been invested by Amazon so far, industry experts estimate that somewhere between $3.3 to $3.8 billion has already been injected into the Indian market, according to CNBC. Much of the investment will go to the company's e-commerce business, Amazon seller services, but a portion may also be invested into other offerings, like Amazon Prime.
As of now, Flipkart is still beating Amazon on the market share front in India.
Amazon's current market share, according to Citi Research, is approximately 30 percent, while Flipkart commands 60 percent of the market, including its mobile and fashion unit. However, by 2027, Citi predicts Amazon India will reach a global market value of $70 billion and revenue of $11 billion, with annual revenue growth of 23 percent.
"We will continue to invest in India where we are seeing great progress with both sellers and also customers," Amazon CFO Brian Olsavsky told investors in a company earnings call. "And we like the momentum we have seen there. The Prime program started in the first year in India grew faster than any Prime program we have seen in other countries."
In April 2018, Bezos stated in a letter to investors that the Amazon app was the most downloaded shopping app in India in 2017, according to App Annie.
Tala Salem, Contributor
Tags: India, Amazon.com
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