Amazon to outdo Flipkart with fresh $2-bn investment in India

A day after Flipkart announced it had raised $1 billion (Rs6,000 crore) in capital from private equity investors, global e-commerce giant Amazon promised to outdo it with fresh investments of $2 billion (Rs12,000 crore) in its Indian arm.

Not just that, the $75-billion US e-commerce giant says this is only the beginning and that more funds will flow.

Amazon, which commenced its Indian e-commerce operations in June last year, has so far allocated roughly $300 million to India, but, with Flipkart raising $1.7 billion in capital, the global giant cannot lag behind.

''With this additional investment of $2 billion, our team can continue to think big, innovate, and raise the bar for customers in India,'' Jeff Bezos, founder and CEO of Amazon.com, said in a press statement. "At current scale and growth rates, India is on track to be our fastest country ever to a billion dollars in gross sales."

The company will use the money to build more categories, bring down costs and facilitate fast and smooth delivery.

Amazon has already stirred up competition with slashing prices, launching same-day delivery, adding new product categories and starting a high-voltage advertisement campaign.

Besides Amazon, US auctioneer eBay Inc is also in the fray for a share of the $13-billion Indian e-commerce market, competing with Flipkart, Snapdeal and fashion e-tailer Jabong. India's e-commerce market, is expected to touch $30 billion by 2020.

Amazon, which operates as a marketplace in India, currently offers over 17 million products on its portal. Since India does not allow FDI in e-commerce entities, Amazon does not sell products directly to customers. Instead, it allows vendors to use its website, warehouses and logistics facilities to sell products.

Globally, however, Amazon has been registering huge losses despite rising sales. In the April-June quarter it reported a net loss of $126 million as against a loss of $7 million in the year-ago period.

Flipkart, which has so far raised Rs15,000 crore, is also yet to turn profitable. Analysts feel that the Indian e-commerce outfit's gross sales will touch $3 billion this fiscal year.