Amazon takes the fight to Walmart by investing another ₹27 billion in India
Prabhjote GillAug 14, 2018, 07.32 PM
Read full story
Amazonrecently announced that it’s investing ₹27 billion in Amazon Sellers Pvt Ltd and another ₹1 billion in Amazon Retail IndiaPvt Ltd.
e-commercegiant also spent another ₹35 billion towards expanding its food retail business in India.
- While going head-to-head with Walmart’s investments in India, both competitors share concerns over India’s
Draft E-Commerce Policy.
Therefore, the new infusion of capital isn’t as surprising as it is expected. The company will have to maintain its aggressive stance in the Indian market will the coming competition from Walmart.
The company also invested an additional ₹1 billion ($14 million) in Amazon Retail India Pvt Ltd and another ₹35 billion ($500 million) to expand its food retail business in India. With the capital infusions combined, Amazon’s total investment over the years comes to around $4 billion.
According to insights by paper.vc, investment was directed into Amazon Sellers Pvt Ltd which is the marketplace for sellers who wish to sell their products online, not only in India but internationally through the e-commerce platform.
Friend or foes
Initially, when Amazon came to India it made a promise of investing $2 billion (₹140 billion) in the Indian market. Come 2016, they met that target while pledging an additional $3 billion (₹210 billion) bringing to the total promised investment to $5 billion (₹350 billion).
In comparison, the company’s authorised capital was a mere ₹15 billion (₹214 million) when the original pledge was made.
This set the pace for the company’s growth in India. Now, with Walmart acquiring Flipkart, Amazon has a competitor with equally deep pockets and no plans of letting go of its newest acquisition anytime soon.
After paying $16 billion to acquire 77% of Flipkart, Walmart stated it had plans of pumping another $2 billion into its Indian subsidiary. And all this was not without any drama. It was only on Thursday that the Competition Commission of India (CCI) finally greenlit the deal.
But, despite their differences, both Walmart and Amazon have issues with India’s Draft of the E-commerce Policy. They claim that if some of the proposals are actually implemented, the disruption to the supply chain would be immensely damaging. Reports claim that they’re also roping in the Trump administration to talk to Indian authorities about their concerns.
The competition between the two companies in India, especially when they’re focusing on increasing their sales rather than their margins, has already begun to lead to uncertainty in the market. While they go head-to-head in the online space, offline retailers could be the ones who bear the brunt.