Amazon India gets a cool $3 billion more while rivals see funding crunch

Amazon has said it will not be restricted by investment as it takes on India. Photo Credit:Pixabay

Amazon, the world’s biggest online retailer, will boost its investment in India by US$3 billion, founder and chief executive Jeff Bezos said late Tuesday at an event in Washington attended by the Indian Prime Minister Narendra Modi.

That will bring Amazon’s total disclosed investment in India to U$5 billion.

Amazon has always maintained that its India expansion will not be restricted by investment pullbacks, and country head Amit Agarwal has said that the company will invest more aggressively as it takes on rivals in the country.

Looks like Jeff Bezos decided to make good on that promise.

The big investment announcement comes at a time when Amazon’s most fierce local rival, Flipkart, and other startups are seeing funding challenges and valuation cuts.

See: Value of Morgan Stanley’s shares in Flipkart, Twitter, Yelp drop over 25% in a quarter

Ecommerce startups in India are increasingly being forced to cut back promotions and extravagant spending as they come under mounting pressure from investors.

“Earlier, conversation with investors were all about GMVs and growth. These days, it is all about unit economics and how to build a sustainable business. The tone is surely different,” a senior executive at an ecommerce company told Tech in Asia. He did not want to be named because the company shares common investors with Flipkart and other rivals.

GMV, or gross merchandise value, is the total value of goods ecommerce companies sell online. It was considered a key measure of ecommerce health because the firms did not break out actual sales. In the past months, however, companies like Snapdeal and Flipkart have tried to take away focus from this parameter. They’re highlighting customer satisfaction and loyalty instead.

See: Snapdeal, Flipkart learn from Amazon as ecommerce focus shifts in India

Yet Amazon seems to be beating rivals even on those customer metrics. A recent Red Seer study shows Amazon India was already a market leader in customer satisfaction scores by the time Flipkart made the adjustments.

Amazon’s Jeff Bezos. Screengrab from Code Conference video.