US retail giant Amazon’s International losses swelled to over $3 billion in the year 2017 as the company stepped up its investment in India to counter rival Flipkart, which roped in investors such as Tencent and Softbank during the year.
Amazon’s international losses have become a metric to gauge how the company’s investments in India are growing, as it has admitted in the past that India was the most significant contributor to this. In 2016, the company’s international losses stood at just $1.3 billion, less than half of that in 2017.
Documents filed with the Registrar of Companies show that Amazon Seller Services, the e-commerce arm of Amazon in India, had raised Rs 62 billion ($1 billion) of capital in the year 2017.
This does not include investments Amazon makes into its cloud and payment arms in the country. While the company is undoubtedly stepping up investments in India to counter Flipkart, a large portion of its investment is going into Prime, the loyalty programme with which it expects to rule India. Amazon said that the growth of Prime in India during its first year has been the highest it has recorded anywhere in the world.
“Prime selection in India now offers members more than 25 million local products from third-party sellers,” said the company in a statement.
Flipkart had raised a mammoth $3.9 billion in funding during 2017 from two rounds and brought onboard investors such as Tencent and Softbank. The Economic Times recently reported Amazon’s biggest competitor Walmart was also close to picking up 15-20 per cent stake in Flipkart, a move which could give it a boost in the grocery category.
With competition heating up in the e-commerce space, it is expected that Amazon’s investments in India will continue to grow. Amit Aggarwal, head of Amazon’s India business had told Business Standard in an interview that despite CEO Jeff Bezos making a commitment to invest $5 billion into India, he would not hold back investments based on that figure.
He had added that nearly half of the investments Amazon has made in India so far has gone into infrastructure, including warehouses and sort centres, making its logistics arm the largest in the country.
Experts have opined that while Amazon is suffering massive losses through its Prime programme in India, it is building loyalty among customers. Flipkart, on the other hand, has struggled to build such a programme and there’s a fear that once the discounting taps are closed, customers will flock to other platforms to make purchases.