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Amazon to Invest an Additional $US3b into India

We have spoken before about the internet and tech start-ups that are expanding India’s job market and overall prospects. It seems now that India’s growing online marketplace is attracting attention from transnational brands.

One such brand is Amazon. According to the Financial Review, the e-commerce juggernaut has set its scope on India and is intending to invest a further $US3b ($4 billion) to bolster its outreach and influence.

The new figure, unveiled by chief executive officer Jeff Bezos at the US-India Business Council's Leadership Summit in Washington, “more than doubles Amazon's total pledged investment since 2014 to $US5 billion.”

Expanding horizons and markets

However, in addition to expanding their customer base, Amazon is also looking to India for a new inventory to sell globally. The Financial Review explains that while Amazon gets the lion’s share of international profits from the likes of the UK, Japan and Germany, “revenue from a group of other international markets, including India, reached $US7.4 billion in 2015, or 6.9 per cent of total sales.”

Amazon had previously targeted China as its next e-commerce destination, but competition proved too fierce as giants such as the Alibaba Group Holding still dominate the market.

Bezos states he believed that one of the factors countering their efforts in China was that they did not do enough market customisation.  He continued, “In China we did some local market customisation but we mostly tried to roll out what had worked well for us in Japan, Germany, UK, Spain, France, Italy, the US, etc., and it needed more local market customization."

An Indian Endeavour

But the move to India is not a surprising one. Internet use is skyrocketing, web shopping is on track to make up 25 per cent of total retail sales by 2020 and according to a report by Google and AT Kearney, the number of online shoppers should top 175m by then too.

Amazon’s long term vision is to be “the primary middleman connecting factories in India and China with customers in the US and Europe.” It is improving its Fulfilment by Amazon service, which currently provides parking, storage and shipping for independent merchants who sell via the website and merging into a global logistics network.

Colin Sebastian, an analyst at Robert W Baird & Co stated that "The added investment reflects the success to date of Amazon in India, as well as a bright outlook for the e-commerce market in the region." But the endeavour is not without its competition, he continues, as "It's really down to a two- or maybe three-horse race” with local e-commerce companies Flipkart and Snapdeal although “Amazon clearly would like to be the winner."

Since its debut in 2013, Amazon has already created some 45,000 jobs in India. According to Bezos, they “continue to see huge potential in the Indian economy” and feel their “Amazon.in team is surpassing even our most ambitious planned milestones."

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Image: Hadrian / Shutterstock.com