At a time when Indian startups are finding it difficult to garner funds to progress, foreign players are busy taking the lead sniffing the opportunity. US-based Amazon has invested an additional Rs 1,350 crore in its India unit this year, keeping no stone unturned to accelerate the run for being the undisputed champion in the Indian market.
Uber has announced its plans to pump in a ‘substantial amount’ in the Indian market to take the lead in the competition with its rival Ola.
The total capital Amazon infused into the main India unit since early 2015 is Rs 8,618 crore as per the regulatory filings of May 31. The money came in March, a few weeks before India introduced discounting and vendor-related restrictions for online marketplaces.
Experts are of the opinion that this money will now also be needed for additional compliance-related expenses. This week also marks Amazon’s three years in India, a duration in which it grabbed the significant pie of the market share.
India has further become a specific target for Amazon after it lost to Alibaba in China. The company in October said it expected India to overtake Japan, Germany and the United Kingdom to become its second-largest overseas market in a few years.
Jeff Bezos, the chief executive of Amazon, on commenting about what lessons the company had learnt from China, at the Code/Media conference in California, said, “We have done much more local market customization in India than we did in China. I think some of the investors in India in the early days thought that India might be a replay of China and they have found out that it hasn’t gone that way.”
Though the move is nothing new for experts tracking online retail stated that Amazon has earlier outspend competitors to dominate a market. Amazon in January made its largest single capital infusion into its India unit at Rs 1,980 crore, a month after it sunk in Rs 1,696 crore.
Kartik Hosanagar, the professor at The Wharton School of the University of Pennsylvania, said, “This is only the tip of the iceberg. While Flipkart and Snapdeal are struggling to attract new capital, the strategic commitment from Jeff Bezos gives Amazon India a huge advantage.”
Amazon India, however, has to deal with the new guidelines that bar any single merchant from accounting for more than 25% of the sales on an online marketplace and disallow any discounting led by the online platforms.
Devangshu Dutta, CEO of retail consultancy Third Eyesight, said, “The FDI policy has clear implications for Amazon’s growth. It cannot depend on Cloudtail (Amazon’s leading merchant) to develop its presence beyond 25% of projected revenues, so it does create a huge push for other merchants and brands.”