Amazon.com, Inc. (NASDAQ:AMZN) has announced that it will invest an additional $2 billion in India as it seeks to consolidate its position in the country’s growing online retail market. The company’s CEO, Jeff Bezos, has already reiterated that the company sees huge potential in India especially on the e-Commerce side thus the push for such a huge investment. The announcement by Amazon comes a day after Indian e-Commerce giant, Flipkart, also disclosed plans to invest $1 billion in the industry, which is seen as one of the ways of also increasing its presence in the fast growing industry.
“Just a day after we saw the big announcement coming in by Flipkart where it said that it had raised $1 billion. Amazon is clearly showing that it is not ready to play second fiddle to anyone announcing plans to invest $2 billion in the operations. This will be used to support Amazon’s growth in India […],” said Bloomberg’s Sunanda Jayaseelan.
The race is now on, for India’s e-commerce business, which is estimated to have the potential of clocking the $22 billion mark by 2018. Amazon is looking at expanding its product portfolio taking into consideration that it is operating on the marketplace model and not as an e-retailer as the Indian law does not recognize the FTI business model.
“Amazon’s CEO Jeff Bezos also said that they see huge potential in the Indian economy and for the growth of e-commerce in India. Amazon of course currently offers about 17 products in India, it operates in the market-place model and not as an e-tailer since India does not allow the FTI,” said Jayaseelan.
India is a first growing market especially in the e-commerce segment where it has has crossed the $1 billion mark in terms of gross sales. Amazon.com, Inc. (NASDAQ:AMZN) is also looking at ways to counter its competitor FlipKart’s dominance of the mobile segment where it currently commands a market share of 50% compared to its 35%. Amazon is set to face steep competition from Flipkart, which is estimated to have approximately 22 million registered users having sold goods worth $1 billion for the 12 months ending March.
FlipKart was founded by former Amazon Execs, Sachin Bansal and Binny Bansal, who seem to be following every page of Amazon Playbook in developing the company to be a 100 million users platform.