Amazon wants to expand its reach into India – and soon. Just one day after India’s Flipkart announced it had raised $1 billion in fresh capital, Amazon one-upped them with an announcement that they would invest $2 billion in India over the course of the coming years. Though according to an Amazon spokesperson, the investment is supposed to be a continuous flow of resources over years to come, the timely release of the announcement seems too calculated to be a coincidence.
Why does Amazon want in so bad? We’ve speculated in the past that India could be the next ecommerce frontier, with great potential for the world’s second most populous nation. Amazon CEO Jeff Bezos released the following statement:
“We see huge potential in the Indian economy and for the growth of e-commerce in India. At current scale and growth rates, India is on track to be our fastest country ever to a billion dollars in gross sales. A big ‘thank you’ to our customers in India — we’ve never seen anything like this”
Its seems that when Amazon looks at India, they see dollar signs. This may be an effort to patch up heavy losses in global operations during the second quarter of the past year. Amazon began its operations in India roughly a year ago, careful not to violate India’s strict policy regarding foreign investments. They currently have over 17 million products than span a variety of categories. Bezos states that the response from customers and small and mid-sized businesses in India “far surpassed expectations.”
This new investment could be a nudge for India’s government to lift the ban on the sale of products from foreign investors. Both India’s new Prime Minister, Narendra Modi, and the Minister of Finance Arun Jaitley are in support of opening India to foreign business. Flipkart however – India’s most successful online marketplace – strongly opposes it.
Amazon’s migration into India will be something to watch. Though there are already sellers on Amazon that reside in India, Amazon’s investment and continued influence in the nation could result in a greater number of sellers joining the marketplace. This may saturate the market for existing sellers. We will continue to watch Amazon, and report their next moves as they sink their massive marketplace anchors into India’s economy.
ENS Economic Bureau. “Amazon to Invest $2 Billion More in India to Pump Growth, Cut losses.” The Indian Express. The Financial Express, 31 July 2014. Web. 21 Aug. 2014.