Jeff Bezos has assured that Amazon’s massive investments in India will keep rolling as it fights to overtake local rival Flipkart which recently raised a massive $1.4 billion from Tencent, Microsoft and eBay to fend off the US giant.
“It’s still Day 1 for e-commerce in India, and I assure you that we’ll keep investing in technology and infrastructure while working hard to invent on behalf of our customers and small and medium businesses in India,” said Bezos, the founder, and CEO of Amazon, in a statement on Friday.
Amazon said that it has grown its selection of products eligible for free and fast shipping through Prime by 75 per cent since launching the programme in India nine months ago. It has also increased fulfillment capacity for its sellers by 26 per cent in the past one year, both of which are indicative of the company’s investments around warehousing and logistics.
Apart from its investments in its core e-commerce business, the company has also announced heavy spending on creating original content for Indian viewers with 18 TV series that will be available on its Prime Video platform. Bundled along with its Prime membership in the country, Amazon is looking at high-quality local content as a hook to get users to keep paying for Prime and thereby boosting loyalty.
“Our India team is moving fast and delivering for customers and sellers… We’re grateful that customers are responding — Amazon.in is the most visited and the fastest growing marketplace in India,” added Bezos.
While Amazon did not break out its investment in India, the company continued to report massive losses from its International business in Q1 2017 which was in the tune of $481 million. In Q3 of 2016, Amazon reported a sudden spike in losses from its International business at $541 million, with CFO Brian T Olsavsky at the time attributing it to the increased investment in India.
Amazon’s increased losses from its International business haven’t subsided in the past nine months, and with the company hell bent on winning the Indian market, these losses are not expected to go down anytime soon. The US firm has committed to investing $5 billion in India, and experts say when that number is achieved, Amazon will not shy away from investing more.
A large part of this investment is going towards getting more customers to opt for its Prime loyalty programme, which some analysts suggest already has 5-6 million Indian subscribers. Globally, Prime members are known to spend at least twice as much as a non-Prime member, with estimates suggesting that in the US a household with Prime spends as much as $1,200 on average every year buying products from Amazon.
Flipkart, the biggest thorn in Amazon’s plans to win over India’s fast-growing e-commerce market continues to hold a 25-30 per cent lead over the US giant in terms of sales. The difference between the number of products each company ships is however far smaller, with Flipkart relying on high-cost smartphones to drive sales.
Amazon, on the other hand, is growing its business in a more wholesome manner, focusing not just on high-priced items to drive sales, but also books and unbranded wares to buyers from tier II markets. Even on a marketing front, brand watchers believe Amazon has done a far better job of building a story around itself than any other e-tailer in the country.