Amazon’s global losses surging due to India but company still bets big on it; here’s why

By: |
Published: February 2, 2018 4:45:29 PM

Despite its global business making losses due to India, Amazon continues to maintain that India is a good story. The US e-taling giant Amazon’s global business recorded losses in the first nine months of 2017 - the reason being India.

Amazon, is an American electronic commerce and cloud computing company based in Seattle, Washington.

Despite its global business making losses due to India, Amazon continues to maintain that India is a good story. The US e-taling giant Amazon’s global business recorded losses in the first nine months of 2017 – the reason being India. The e-commerce major recorded $2.1 billion for the time period mentioned against nearly $800 million in the corresponding period in the previous year. The losses from its international operations widened to $919 million for the December 2017 quarter. “India continues to be a good story for us. We feel that it’s had a lot of growth in the past year. In fact, more Prime members joined India’s Prime programme in the first year than we’ve seen in any other country in the history of the world, our world,” Amazon Senior VP and CFO Brian Olsavsky said in an investor call. So, the company still thinks India is a good bet despite making losses here. Amazon registered 38 percent rise net sales to $60.5 billion in the fourth quarter, compared with $43.7 billion in the December 2016 quarter.

The reasons behind the losses accruing in India are these:

Amazon, is an American electronic commerce and cloud computing company based in Seattle, Washington. It was  was founded by Jeff Bezos on July 5, 1994. Here are the major reasons behind the losses:

  1. Amazon has made some very heavy investments in India which are adding to the company’s losses.
  2. In its battle with domestic rival Flipkart in India, Amazon is offering global products at heavy discounts which are taking toll on its revenues.
  3. Despite India being a loss making proposition, the e-commerce major has invested around Rs 2,000 crore.
  4. It has invested heavily on Amazon Seller Services as well.

Just days back, Amazon infused fresh capital to the tune of Rs 1,950 crore into its India unit, Amazon Seller Services to strengthen the war-chest of the company against domestic rival, Flipkart. Amazon Seller Services has so far received over Rs 8,000 crore (about $1.28 billion) during this financial year from its US parent, as per documents filed with the corporate affairs ministry.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.