Amazon India spending increased in 2017 as it seeks to beat Flipkart

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Amazon India remains a key cost centre for the Seattle based company, and a critical battleground, as it seeks growth in the second most populous country in the world against stiff competition. And the company’s spending there was part of the reason why, whilst posting strong quarterly and annual results for 2017 to Wall St., that outside of the United States, Amazon continues to make a loss in its overall international operations.

Amazon’s international loss increased to $3 billion in 2017, from $1.28 billion in 2016, but total sales increased to $54 billion from $43.9 billion.

Amazon spent about Rs 6,200 crore (roughly $970 million) into its main India unit, Amazon Seller Services, between July and December in 2017 and also another Rs 1,950 crore in January this year. Amazon launched its Alexa voice controlled system in India last year and is now preparing to launch the music streaming service next. India is also the fastest-growing market for the company’s Prime subscription service in terms of memberships

Amazon’s chief financial officer Brian Olsavsky said during the earnings call last Thursday that the company was still positive and keen on its Indian prospects: “India continues to be a good story for us. We feel that (Amazon India) had a lot of growth in the past year. In fact, more Prime members joined India’s Prime program in the first year than we’ve seen in any other country.”

Amazon is in a heated battle in India against eBay associated Flipkart. And whilst it is widely acknowledged that it has failed to succeed in China, having been stymied by regulation and homegrown competitors like Alibaba, India is still up for grabs and potentially a huge marketplace in the future.

All in all Amazon has committed to spending $5bn in India to capture the lion’s share of ecommerce there from arch-rival Flipkart. It’s already spent 3 of that 5 and yet it’s not entirely clear who is winning the face-off.


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