The Seattle-headquartered company also invested a further Rs 1 billion in Amazon Retail India, the food retail unit of the company which will drive its grocery category. Amazon had said that it would invest $500 million into food retail soon after the government opened the sector up to 100 foreign direct investment.
This investment in Amazon’s marketplace unit comes just three months after it infused Rs 26 billion into the unit, and takes the total investment the company has made in its marketplace business close to $3.7 billion. Jeff Bezos, CEO of Amazon, has committed to invest $5.5 billion into the India business and that figure is approaching quickly.
Amazon says over half of the capital it has invested in India so far has gone towards building infrastructure, including investments in technology, warehousing, logistics, etc. While the company does not admit it, a lot of investment has also gone into discounting products on its platform to attract more buyers.
In the past one year, Amazon has also made significant investments in its loyalty programme Prime, which not only call for more money to be spent for logistics to enable faster deliveries, but also for the creation of original content that goes up on Prime Video. The US firm had said that it would invest as much as $300 million to create India-specific shows over the next few years.
Apart from its core e-commerce marketplace, Amazon is also investing heavily in its cloud computing, payments and even its IT services divisions in India. Counting the money that has come into these businesses, Amazon’s investment in India ticks over $4 billion according to industry analysts.
Moreover, Amazon’s investments in India are expected to steadily increase over the next few years. In the first two quarters of the current financial year, Amazon has already invested Rs 53 billion into its marketplace unit, compared to Rs 81.5 billion it invested in the whole of the previous financial year. Traditionally, the company brings in a larger quantum of investment during the festive period of Diwali to drive its mega sale.
While the investment in India has been steadily going up, the loss the company makes in India might not show up as prominently on Amazon’s balance sheet. For the three months that ended June, Amazon reported a loss of $494 million from its international business, the third consecutive quarter-on-quarter drop, even as the company continues to ramp up its investments in India.
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This drop in losses the company was making internationally was attributed to improved operating margins in Japan and Europe, effectively offsetting some of the loss the company was making in India. "We have seen over the last few quarters, improved operating margins internationally in places like Europe and Japan. But we continue to invest and are investing in India obviously,” Brian Olsavsky, the chief financial officer at Amazon, had told investors during a call.