Amazon’s additional investment plans raises pressure on Flipkart and Snapdeal to keep raising fresh funds at a time when investors have soured on e-commerce
article source: LiveMint – June 8, 2016Bangalore: Amazon.com Inc, the world’s largest online retailer, said it will invest another $3 billion in India after the company exhausted its earlier investment pledge of $2 billion, piling pressure on local rivals Flipkart and Snapdeal to keep raising fresh funds.
Amazon’s additional investment highlights the ultra-aggressive rate at which it is spending on discounts, advertising, logistics and other things to achieve its ambition of becoming the largest e-commerce company in India.
An Amazon spokesperson confirmed the $3 billion investment plan, reported earlier on Wednesday by Reuters, which quoted Amazon chief executive Jeff Bezos at an event in the US attended by Indian Prime Minister Narendra Modi.
In July 2014, Bezos announced the company will pump in $2 billion into India over time. That announcement was seen as an open challenge to local rival Flipkart, India’s largest e-commerce firm, which had announced just one day earlier that it raised $1 billion from Tiger Global, Naspers and other investors.
Analysts and investors in India believed Amazon would take a few years to run through that money, but the company shocked the market by burning through the cash in less than two years.
Since Bezos committed $2 billion, Amazon Seller Services Pvt Ltd (Amazon India) has already received roughly Rs 12,080 crore from , documents with the Registrar of Companies show. This is apart from the company’s cash infusions in its logistics unit Amazon Transportation Services Pvt. Ltd and Cloudtail India Pvt. Ltd, Amazon’s joint venture with Catamaran Ventures.
Mint reported on 4 April that Amazon India has almost doubled its authorized capital to Rs.16,000 crore, exceeding its massive capital commitment of $2 billion made in July 2014.
Amazon’s additional investment plans raises the stakes for Flipkart and Snapdeal to keep raising fresh funds at a time when investors have soured on e-commerce. Mint reported on 14 April that Flipkart and Snapdeal are struggling to attract investors at their preferred valuations.