Amazon is doing well in India as an online marketplace and is well aware of it. The etailer’s CEO and founder Jeff Bezos confirmed that his company will continue to invest in its Indian business. And, since January 2017, the US-based ecommerce company has infused around $600 million (i.e. Rs.3,800 crore) in its Indian business.
Where has Amazon been investing?
The funds it has been pouring into its Indian business are being used to build:
- A seller base (currently at 200,000)
- A payments arm (recently obtained pre-paid license for the same)
Nearly half the investment money has gone towards setting up of warehouses and data sorting centres.
Records with the ministry of corporate affairs show that two of its largest investments were spent in the following manner:
- Amazon Seller Services = Rs.1,680 crore
- Amazon Data Services = Rs.1,381 crore
Cash pumped in has also be distributed among its payments, wholesale and IT services arms in the country.
Amazon competing with Flipkart’s investments?
Bezos has already stated that his company will be investing $5 billion over the next five years in India.
Earlier this year, Amazon’s Agarwal told Business Standard, “We do not really hold ourselves back based on a targeted investment. We will require a lot of investment, as will Indian e-commerce. It is very early and we should be ready to invest for many years.”
Unceasing funding is essential to establish a good hold over the Indian online shoppers, to keep Alibaba and others from swooping in and stealing its Indian market.
Gaining more customers at the cost of sellers?
Increasing the use of its mobile wallet is also on a task on the etailer’s list of things to do. In an attempt to boost the use of its mobile wallet Amazon is offering shoppers a 10% cashback even for items returned.
The offer states: “Select Amazon Pay balance, get 10% extra as refund amount.”
Online sellers believe this move is against their interests of doing business. As it will encourage unnecessary returns.
The online sellers group of over 1,500 vendors, AIOVA said, “Amazon is encouraging returns at sellers’ cost and investment. Amazon should give equal incentive to the seller whose stock is being returned.”
Not so long ago, Amazon injected Rs.130 crore in its Indian payment entity. The next phase of its growth plan is to provide unbelievable offers to users. Like the one mentioned above and others like Rs.100 cashback on purchases of more than Rs.700 via Amazon Pay balance, only for first time users.
Amazon claims this is all part of their efforts to improve the online shopping experience. Sriram Jagannathan, Vice President Payments, Amazon India, said, “Our aim is to improve the digital payment experiences for customers buying on our marketplace…We provide offers to customers to try this experience.”
The etailer will be offering financial products too. Could this take focus away from online seller needs on the platform or assist sellers with more sales?