Amazon pours Rs.160 cr. into its wholesale business; What could be the reason for this?

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It appears that Amazon has started giving online wholesale more attention. In September, the parent company poured Rs.115 crore into its wholesale business. This month the ecommerce company infused Rs. 160 crores into Amazon Wholesale (India).

Any reasons behind the investment?

When asked about the reason for investment an Amazon India spokesperson said, We continue to invest in India as part of our long-term commitment but we do not comment on specific details of our investments.”

There are at least 10,000 sellers working with AmazonBusiness in Bangalore. The annual sales acquired through them in 2015 were as high as $1 billion. So, pushing these numbers higher could be a reason behind the investment.

Another reason is the potential Amazon sees in Indian online B2B. The CEO of the ecommerce company, Jeff Bezos has already committed $3 billion dollars towards online retail in India. In addition to this, in 2014, Walmart reported that India’s B2B market has the potential to reach $700 billion by 2020.

Finally we have competition. Amazon faces competition from Flipkart as is and is likely to face even more competition from Alibaba and Walmart once they enter Indian online terrain. So, building its presence in this spectrum sounds like a good idea for Amazon.

Who orders from the platform?

The present business model followed by AmazonBusiness has pharmacies, corner stores and small outlets ordering from it. They have also been extended credit on their purchases through a partnership with banking and non-banking financial institutions.

The general manager at AmazonBusiness, Kaveesh Chawla mentioned some time back that the stores ordering from them do not incur logistic charges since orders from the wholesale platform are shipped for free.

AmazonBusiness, the B2B wholesale unit from Amazon currently sells fast moving consumer goods (FMCG), office supplies, IT products, healthcare, personal products and other such goods. It operates in Bangalore and Mangalore and is likely to expand to other cities soon.

The wholesale platform also acts as a distributor for brands like Motorola and Coolpad which have no offline distribution outlets. These products are shipped to locations like Delhi, Telangan and Tamil Nadu, where the B2B platform is yet to sell its FMCG goods.

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