 "Amazon poised to win big as India launches annual festive shopping spree")
Global e-commerce giant Amazon, which is investing heavily in India, after it lost out in China, says it will play by India's e-commerce rules that prohibit online marketplaces from offering discounts and restricts sales from their captive units to 25%, even as it invests heavily to take on local players Snapdeal and Flipkart.
Amazon broke its silence exactly a month after India came up with rules that allow 100% foreign direct investment in e-commerce marketplaces, but with riders to offer level playing field to brick and mortar retailers.
"We're happy to see the recent clarifications. We're happy to operate in any regime and frankly the more clarity, the better," said Phil Hardin, head of investor relations at Amazon in a call with investors to discuss the company's Q1 2016 financial results.
Read more from our special coverage on "AMAZON"
Hardin however skirted questions on how it would manage Cloudtail's business and did not elaborate on whether Amazon has begun complying with new rules.
Cloudtail is Amazon's joint venture with Catamaran Ventures, the personal investment arm of Infosys founder N R Narayana Murthy, which is the largest vendor to sell goods on the platform.
Amazon is engaged in a heated battle with Flipkart and Snapdeal, backed by Chinese e-commerce player Alibaba to capture a slice of India's fledgling e-commerce market. Alibaba, which dominates China, has also announced that it also wants to go solo in India, adopting a three-pronged attack strategy with Paytm and Snapdeal to increase its presence in India.
Flipkart, which is struggling to raise additional money needed to fend of its rivals, has seen senior executives quit, valuations come down and seen an organisation rejig. The company, among the most vocal in India's e-commerce industry has gone to huddle and focus on retaining its dominant market share amidst increasing competition.
For now, most Indian e-commerce players have put a halt on offering massive discounts and instead are focusing on improving customer service and logistics. This is seen to be helpful for both local players Flipkart and Snapdeal. Amazon, which has taken up an open cheque book policy for India, could be restricted to the third spot if it isn't allowed to out discount products on the other two sites.
All three firms have cancelled their seasonal sales, offering massive discounts to customers for short durations, in view of being compliant with the government's rules. However, this will hurt Amazon the most, since it has the deepest pockets and can't use its biggest advantage of being a captive unit of the parent company giving it freedom from funding cycles.
This isn't to say that Amazon isn't investing in India. In January to March period, Amazon said that margins on international operations was lower than that in the US due to massive investments the company was making in India.
"We are making large investments in India and we're excited with what we see and we will continue to heavily invest in India," said Brian Olsavsky, chief financial officer at Amazon. Olsavsky also stated that he had just returned after spending a week in India, adding that the company continues to invest on all fronts.
India is the last large opportunity globally for Amazon after conquering the US market and failing to make a dent in China. Chinese e-tailer Alibaba and Amazon are in a standoff in India, to see if it can out invest the other and claim the market. Homegrown Flipkart, which is backed by firms such as Tiger Global, Naspers and DST
"During the quarter, we rolled out a feature called Tatkal which is a studio on wheels that we go to the sellers to help them sign up. We let them do registration, imaging, catalog, uploads and basic seller training. So we're taking it to the sellers, taking the business to the sellers. We've already reached sellers in 25 cities and we're really helping them expand their business not only within their home region, but throughout the whole country," said Olasavsky.
