Amazon losses jump on India investments
BENGALURU: Amazon.com. Inc.’s loss from its international business surged in the June quarter, mainly because of its investments in India, but the US-based e-commerce giant intends to aggressive ly pursue expansion in the market where it’s locked in a fierce fight for dominance with local leader Flipkart.
Amazon’s international loss wide ned more than five-fold from a year ago to $724 million in the three months ended June, the company said on Thursday. The world’s largest online retailer’s overall net sales, including in the US, increased 25% to $38 billion, but overall profit plunged 77% from a year ago to $197 million.
In a post-earnings conference call with investors and analysts, Amazon’s chief financial officer Brian TO ls av sky said the online marketplace is preparing to launch its Echo devices and Alexa voice platform in India.
“The year-over-year difference (in international loss) is primarily driven by investments, what we were within the guidance range and we continue to invest in, as I said, fulfilment capacity and logistics services, digital video, our Echo and Alexa, Echo devices and Alexa platform (in) India, the build up at the AW S (Amazon Web Services) infrastructure, all the things I mentioned, not to mention Prime Now and Amazon Fresh and Prime benefits,” said Olsavsky.
Earlier this year, Mint reported that Amazon had invested another ₹1,680 crore in its Indian unit as part of its com- mitment to invest $5 billion to expand its local business.
For Amazon, India represents a crucial battlefront where it is locked in a battle with arch-rival Flip kart to dominate what is seen as the world’s last major unconquered Internet market.
Over the past four years, Amazon has expanded at a break neck pace in India and has almost caught up with Flipkartin terms of stand-alone monthly sales. Mint reported earlier in July that Flipkart, which started out in 2007, continues to be well ahead of Amazon in terms of overall monthly sales, including sales from its fashion units Mynt ra and Jabong, but Amazon is catching up fast.
In fact, in terms of other key metrics such as app downloads, desktop visits and mobile website visits, Amazon India has already over taken Flip kart. According to data from market intelligence firm Similar Web, which tracks website traffic, Amazon India’s desktop visitss to odat 276million for the quarter ended 30 June, compared to 167.6 million for Flipkart. For its mobile website, Amazon India recorded 311 million visits during the June quarter, compared to 157 million for Flipkart, according to SimilarWeb.
Amazon also has enough financial muscle to fight Flipkart in India and in recent interviews Amazon’ s India chief Am it Ag arwal has indicated that the company will spare no expense to conquer India.
Amazon is desperate to dominate the Indian Internet market, after losing out to Ali ba ba. com in China.
In June 2016, Amazon. com said it would invest an additional $3 billion in India after the company exhausted its earlier investment pledge of $2 billion made in 2014.
Amazon has been spending money on building massive warehouses, a large logistics unit, marketing, discounts and increasing product assortment in India.