Amazon to inject another $3b in India operations
Amazon is planning to inject another $3 billion investment in its Amazon India operations, Amazon CEO Jeff Bezos announced Wednesday at the U.S.-India Business Council’s Leadership Summit in Washington, DC.
That more than doubles Amazon’s outlays in India since 2014, to $5 billion.
Amazon, like other retailers including Chinese e-retail giant Alibaba, has turned to India for overseas growth as growth in China has cooled.
With a population of 1.25 billion that includes a large young, mobile-first generation—many of whom share English as a common language—plus an emerging middle class, India presents significant growth opportunities for retailers from across the globe.
E-commerce competition in India is fierce, but Amazon has quickly emerged as a major player in the country since its debut in 2013. Ten-year-old Flipkart is India’s largest homegrown e-retailer, with a gross merchandise value of $10 billion and a track record of raising $3.15 billion in venture financing. And six-year-old Snapdeal, which recently said it had doubled the number of sellers on its marketplace last year to more than 300,000, is on its way to a projected 500,000 sellers by the end of this year.
But Amazon India has given Flipkart a run for its money since its arrival. India is providing Amazon with its largest number of new customers after the U.S., and Amazon India's Q4 2015 sales were equal to its total 2014 sales, according to Seeking Alpha. (Amazon hasn't released numbers on its sales in India.)
New rules announced earlier this year by the Indian government’s Department of Industrial Policy and Promotion officially allow up to 100% foreign ownership of e-commerce marketplaces, which opens the door to more investments in and by those companies, including Amazon. But the rules also mean that e-commerce companies must be in the business of providing technology platforms that facilitate trade between buyers and sellers, as opposed to an old-fashioned, “inventory-led model” where a retailer owns the goods it sells.
That could be a challenge for Amazon, which has moved to sell more of its own private-label goods, from apparel to electronics accessories.
But Amazon CEO Jeff Bezos seems excited by the company’s prospect in India, saying in his annual letter to shareholders that its Seller Flex initiative, which leverages Amazon sellers’ warehouses to store other products sold on Amazon, is boosting its fulfillment efforts there. Infrastructure, fulfillment, and delivery are underdeveloped in India, experts have told Retail Dive, and must be expanded and perfected even as e-commerce grows.
In a place where, experts have also told Retail Dive, many sellers themselves must be educated about selling online, Bezos said Amazon is taking it upon itself to do that. For a program dubbed Amazon Chai Cart, the company rolled around urban business districts serving tea and other refreshments to business owners and engaging them in conversations about e-commerce.
“Through this program and other conversations with sellers, we found out there was a lot of interest in selling online, but that sellers struggled with the belief that the process was time-consuming, tedious and complex," Bezos wrote.
And in India, as everywhere, Amazon is benefiting from its lucrative AWS unit, which is also developing new infrastructure in the country, according to the Seattle Times.
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