Flipkart raises $1 billion. Competitor Amazon ups its game in India.
| Mumbai, India
Amazon.com Inc on Wednesday said it will invest a further $2 billion in聽India聽just a day after the country's largest e-tailer聽Flipkart聽attracted $1 billion of fresh funds, raising the stakes in a nascent but fast-growing e-commerce sector.
Amazon, which opened its Indian website in June last year, has drawn up the battle lines by slashing prices, launching same-day delivery, adding new product categories and embarking on a high-voltage advertisement campaign.
Amazon and聽Flipkart聽are joined in聽India's $13 billion e-commerce sector by marketplace Snapdeal, fashion e-tailer Jabong, and U.S. auctioneer聽eBay Inc.
"With this additional investment of $2 billion, our team can continue to think big, innovate, and raise the bar for customers in聽India," Chief Executive Jeff Bezos said in a statement. "At current scale and growth rates,聽India聽is on track to be our fastest country ever to a billion dollars in gross sales."
Amazon had not previously disclosed Indian investment plans. But on Monday, the U.S. company said it will raise its presence in the country by opening five more warehouses, almost doubling storage capacity to half a million square feet.
"It's all about who builds up scale faster and remains relevant for the next few decades," said聽Harminder Sahani, managing director of retail consultancy聽Wazir Advisors.
Amazon makes its money in聽India聽by charging third-party suppliers to use its website to sell 17 million different products including books, electronics and clothing.
The government is considering allowing foreign retailers to sell directly to customers. It recently took a step in that direction by allowing retailers to sell online products manufactured in聽India.
Indian e-commerce is expanding at a compound annual growth rate of 34 percent, according to a joint report by consultants Digital-Commerce, the聽Internet Mobile Association of India聽and the聽Indian Market Research Bureau. That rate, however, is slower than in some other emerging nations such as聽China.
Of the $13 billion market, travel services account for about 70 percent, according to consultancy Technopak. The type of goods sold through Amazon made up $1.6 billion of the total last year, according to researcher聽Forrester, and Technopak expects that figure to swell to $76 billion by 2021.
By comparison, e-commerce sales in聽China聽are likely to surpass $180 billion this year, according to researcher eMarketer. (Reporting by Nandita Bose and Nivedita Bhattacharjee; Editing by Christopher Cushing)
