Amazon’s latest Rs 4,400 crore funding in its India business, on top of the $5.5 billion funds already committed, signal Jeff Bezos’ confidence in the India market, notwithstanding the current economic slowdown.
Amazon’s latest Rs 4,400 crore funding in its India business, on top of the $5.5 billion funds already committed, signal Jeff Bezos’ confidence in the India market, notwithstanding the current economic slowdown. The latest funding (nearly $630 million) provide the e-commerce behemoth with an opportunity to swell its user base in India, experts say. “It looks like the slowdown is giving them an opportunity to reach out to customers in a better way because customers are looking for a better deal,” Satish Meena, Senior Forecast Analyst, Forrester, told Financial Express Online. Further, while certain sectors have been hit by sluggish sales, online commerce platforms “look at it as an opportunity to expand the market, add more buyers, and allow more people to experiment with online channel,” Satish Meena said.
The US-based Amazon’s India arm has already received huge investments of about $5 billion within the first five years of its operations. Amazon also committed an additional $500 million for its retail arm. The company had also announced that it will pump in another $2 billion soon, CNBC TV-18 reported last year. The latest announcement will scale the total India funding to over $6 billion.
Amazon has been incurring huge amount of losses in India. Amazon India’s Seller arm alone lost Rs 5,685 crore in the last fiscal year 2018-19, according to Tofler data. “Amazon Seller Services Private Limited, reported its revenues for financial year 2018-19 as Rs 7,778 crore, a 55% jump since the last financial year. The company further reported a net loss of Rs 5,685 crores during the same fiscal. This is 9.5% decrease from the last financial year,” Tofler said.
However, Amazon’s latest funding is not likely towards making up for the losses in FY19. “Amazon’s focus is on investment, and not making money,” Satish Meena told Financial Express Online. Further, the company is here for a long-term and two of its biggest arms as of now, viz Amazon Sellers Service and Amazon Pay need funding to grow, he added.