A day after Flipkart announced raising $1 billion in funds, e-commerce giant Amazon on Wednesday said that it will invest an additional $2 billion in India to support its growth in the country. “After our first year in business, the response from customers and small and medium-sized businesses in India has far surpassed our expectations,” said Jeff Bezos, founder and CEO of Amazon.com.
“We see huge potential in the Indian economy and for the growth of e-commerce in India. With this additional investment of $2 billion, our team can continue to think big, innovate, and raise the bar for customers in India,” Bezos said. “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,” he added.
Amazon has scaled up rapidly in the country since its launch in June last year. It now sells over 17 million products across 28 categories and hosts about 8,500 merchants on its marketplace. The company has heavily invested in logistics and marketing. It has created a network of warehouses across the country and earlier this week announced opening of five more warehouses in cities like Delhi, Jaipur and Ahmedabad.
It has also launched a slew of customer service programmes, like next-day and same day delivery. These initiatives are bearing fruit with the company already catching up with the number two online retailer in the country, Snapdeal, in terms of sales. Both Amazon and Snapdeal have sold about $600 million (about Rs 3,600 crore) worth of products this year and are targeting $1 billion or Rs 6,000 crore sales this fiscal. Flipkart, the market leader, reached that milestone last fiscal.
Meanwhile, Flipkart, which raised $1 billion from a group of investors including Tiger Global, Naspers and Singapore’s GIC, is the largest online retailer in the country. It reached $1 billion in sales last fiscal and, according to sources, is on track to breach the $3 billion mark this fiscal. And Flipkart now has a marketing budget that is in the millions of dollars.
The seven-year-old company has so far raised over $1.7 billion in risk capital. In May, it sucked in $210 million led by Russian billionaire Yuri Milner’s DST Global a few days after announcing its acquisition of fashion portal Myntra for an estimated $370 million.
“This funding ensures that Flipkart can now invest in building on the promise they have shown,” said Arvind Singhal, chairman of retail advisory firm Technopak.