Amazon infuses Rs 26 bn in India, Jeff Bezos shows he still means business

The investment comes after Amazon lost out to rival Walmart in acquiring a majority stake in Flipkart

After losing out to Walmart in acquiring online marketplace Flipkart, Amazon’s Chief Executive Jeff Bezos is keen to show that he still means business in India and has charged up the company’s local e-commerce unit with fresh funds. 

Amazon Seller Services, the marketplace unit of the US online retail giant in India, saw a cash infusion of Rs 26 billion (approximately $390 million) late last month, according to documents filed with the Registrar of Companies (RoC) that was sourced from business intelligence platform Paper.vc on Tuesday.

The Seattle-headquartered company, earlier this month, is learnt to have made a bid to acquire a controlling stake in Flipkart with an investment of around $12 billion along with a $2 billion break-away fee. However, Flipkart board preferred to go with Walmart as the investors and founders were afraid that a deal with Amazon would run into regulatory hurdles.

The investment comes at a time when rival Flipkart is expected to be supercharged with funds through a $15-billion deal that will see Walmart acquiring a majority stake in the Indian firm. A major portion of the funds that Flipkart raises will be used to give exits to existing investors, but it is expected to raise a handsome $2-3 billion in primary capital that will help it fight Amazon.

The latest infusion brings the total capital pumped into Amazon’s e-commerce business in India to Rs 223.9 billion, or around $3.3 billion, since its inception around five years ago. Last year, the firm had also raised the authorised capital of the unit up to Rs 3.1 billion (Rs 310 crore), signalling that a lot more investments were on their way. These figures exclude the investments Amazon is making in its other units in India.

Amazon had invested Rs 81.5 billion into its marketplace unit across four rounds in the financial year 2017-18. The company seems to be keeping up its investment momentum in FY19, with flagship programmes such as prime and planned expansion of its warehousing and logistics arms sucking up major cash this year.

Bezos has already committed to invest $5.5 billion into its India business in order to win the market for online retail in the country. On several occasions, his trusted deputy Amit Agarwal, who heads Amazon’s India unit, has said that this is just a placeholder figure and that the company would not restrict its investments based on it.

Amazon is also heavily investing in its cloud computing division, its information technology services unit (oldest one in the country) and more recently in its payments arm in India. In late 2016, the company put Rs 13.8 billion into Amazon Data Services and last year also invested Rs 3.82 billion in Amazon Pay (India). In 2017, the firm also got a go-ahead from the government of India for investing $515 million in multi-brand ‘food-only’ retailing.

With Walmart gaining an entry into India with Flipkart, Bezos will be going up against his biggest adversary who not only has the financial muscle but can also give Amazon a run for its money on the sourcing and marketing front. However, the latest funding can be read as a sign that Amazon isn’t stepping on the brakes in India, and if anything, is only going to ramp up its investments to try and win in the country.