Things are not looking too good for US-headquartered ecommerce biggie Amazon, in India. According to the recent quarter ending figures clocked by the company, Amazon’s losses from its international business have increased by over four times to $487 million compared to $108 million in the same period last year.
This significant escalation in the losses of the company’s international business can be attributed to the aggressive investment strategy adopted by Amazon in the Indian market, where it’s fighting it out with domestic biggies like Flipkart, Snapdeal etc. for market share.
The year 2016 saw Amazon coming up with a number of new ways to keep the Indian consumers interested in the ecommerce site and choose them over their domestic rivals. The initiatives launched included Amazon’s much-famous subscription-based service Prime, which the ecommerce giant priced much cheaper in India when compared to the US. In the previous quarter of last year, Amazon had clocked $541 million in losses from its international business, courtesy its heavy spending activities in India.
Commenting on the company’s quarterly results, Amazon’s CFO Brian Olsavsky said that India continues to be a rather large investment for the ecommerce giant but the company is hopeful of the hard work they have put in and the relations they have been successful in creating with customers and sellers alike in the country over the last couple of years. He said, “We continue to develop new functionality for that country , whether it’s delivery or seller features. We rolled out Prime last summer if you’ll remember, and we recently launched Prime Video there.“
Olsavsky also added that for now, they will continue to do what they’re doing as establishing a business in a new country takes time. He said, “We’re bullish on India in the longer-term.”
Not only India, the ecommerce biggie also has its eyes set on China. Similar to India, Amazon recently unveiled its Prime services in China as well. Amazon’s net sales in international business saw an increase of 18% to $14 billion during the same period of time.
Answering a question on the company’s investments in India and China, Olsavsky said, “We like the initial engagement we’re seeing and the response from, again, both customers and sellers.”
The ecommerce major has been employing an aggressive growth strategy when it comes to India and pumping in hard money in discounts and promotions, building infrastructure, and new launches in the country.
According to sources, Amazon is currently spending close to $1 billion in the country to keep up with domestic rival Flipkart, which is finding it hard to raise fresh funding amid the continuous changes in the company’s higher office.
Amazon is also aggressively pushing towards its daily consumables and FMCG goods business Amazon Now and Pantry in the Indian subcontinent. The company has put in over a whopping Rs 7,000 crore over the period of last year in its Indian entity, which is running the marketplace business in the country. In addition to this, the Seattle-based company has also pumped in about Rs 150 crore to its payments business in India strengthening the rumour that the company wants a larger piece of the payments market in the country.