AMA­ZON DOU­BLES IN­DIA WAR CHEST

In­creases au­tho­rised cap­i­tal to $4.74 bn; raises stakes in bat­tle with Flipkart

Hindustan Times (Gurgaon) - - Metro - Anir­ban Sen n feed­back@livemint.com

Ama­zon In­dia has nearly dou­bled its au­tho­rised cap­i­tal to ₹31,000 crore ($4.74 bil­lion), nearly match­ing its mam­moth cap­i­tal com­mit­ment of $5 bil­lion made in June last year. Not only does it im­prove the prospect of fur­ther in­vest­ment com­mit­ments from founder and CEO Jeff Be­zos, it also sets the stage for an all-out war against lo­cal ri­val Flipkart.

BENGALURU: Ama­zon In­dia has nearly dou­bled its au­tho­rised cap­i­tal to ₹31,000 crore ($4.74 bil­lion), nearly match­ing its mam­moth cap­i­tal com­mit­ment of $5 bil­lion made in June last year.

Not only does it im­prove the prospect of fur­ther in­vest­ment com­mit­ments from founder and CEO Jeff Be­zos, it also sets the stage for an all-out, high-stakes war against lo­cal e-com­merce ri­val Flipkart.

Ac­cord­ing to reg­u­la­tory fil­ings with the Registrar of Com­pa­nies on Tues­day, Ama­zon In­dia has al­ready is­sued paid up cap­i­tal of ₹17,839 crore ($2.7 bil­lion) to­wards its mar­ket­place arm Ama­zon Seller Ser­vices — far ex­ceed­ing its ini­tial com­mit­ment of $2 bil­lion made in July 2014.

The lat­est move by Ama­zon in­di­cate that the Amer­i­can e-com­merce gi­ant is more than will­ing to not just match, but out­weigh the war chest com­man­deered by ri­val Flipkart in the bat­tle for what is widely seen as the world’s last ma­jor con­sumer In­ter­net econ­omy.

“As In­dia’s largest and fastest grow­ing e-com­merce player, and with a long-term com­mit­ment to make e-com­merce a habit for In­dian cus­tomers, we con­tinue to in­vest in the nec­es­sary tech­nol­ogy and in­fra­struc­ture to grow the en­tire ecosys­tem. We are de­lighted and hum­bled by the trust from our cus­tomers, to lead in In­dia on things that mat­ter to our cus­tomers in over four years of our busi­ness, while con­tin­u­ing to launch in­no­va­tive In­dia-first ini­tia­tives as well as com­pletely new of­fer­ings like Echo, Prime and Prime Video,” said an Ama­zon In­dia spokes­woman in re­sponse to a query from Mint.

Flipkart, which is also ex­tremely well funded and counts among its in­vestors Ja­pan’s SoftBank Group Corp, China’s Ten­cent Hold­ings Ltd, South Africa’s Naspers Ltd and Ac­cel Part­ners, among oth­ers, has al­ready raised nearly $3 bil­lion in two sep­a­rate tranches this year and has de­clared that it has at least $4 bil­lion of cash re­serves.

Flipkart did not im­me­di­ately re­spond an email seek­ing com­ment.

Ama­zon’s will­ing­ness to pump in more funds is sig­nif­i­cant at this point, be­cause it comes af­ter a bruis­ing fes­tive sea­son bat­tle against Flipkart where it lost out to the In­dian online re­tailer, as Mint re­ported on Septem­ber 27. The com­pany also lags Flipkart in terms of over­all gross sales.

To be sure, Ama­zon has dis­puted the claim that it lags Flipkart and has as­serted that its method­ol­ogy of cal­cu­lat­ing gross sales could be dif­fer­ent from that de­ployed by Flipkart. Gross sales refers to the value of goods sold on a plat­form, not net rev­enue.

In re­cent in­ter­views, Ama­zon In­dia chief Amit Agar­wal has in­di­cated that the online re­tailer has a multi-year, multi-bil­lion dol­lar view as far as In­dia is con­cerned. “I think our in­vest­ments are still squarely in the same three ar­eas—how do we add more se­lec­tion, how do we make it eas­ier for sell­ers to of­fer more com­pet­i­tive prices and how do we build for faster de­liv­er­ies...A layer on top of that is that we keep in­vest­ing in Prime—so video, mu­sic, Echo, etc, are our key ar­eas,” said Agar­wal in an Oc­to­ber 27 in­ter­view.

Mint re­ported in April 2016 that Ama­zon In­dia, which was launched in June 2013, had dou­bled its au­tho­rized cap­i­tal to roughly about ₹16,000 crore. Since then, Ama­zon has in­vested twice in its In­dian mar­ket­place— a ₹2,010 crore in­fu­sion in De­cem­ber last year and an­other ₹1,680crore in­vest­ment in June.

The pace at which Ama­zon has raised the stakes in In­dia to fight Flipkart has been stag­ger­ing. In July 2014 Ama­zon’s au­tho­rised cap­i­tal was only ₹1,500 crore, when Be­zos made the ini­tial $2-bil­lion com­mit­ment. In June 2016, Ama­zon com­mit­ted an­other $3 bil­lion. Ama­zon has nearly caught up with Flipkart in its four years of op­er­a­tions in In­dia.

“As of now, the bat­tle be­tween Flipkart and Ama­zon is too close to call. I don’t think is Flipkart is go­ing to lose out in the near fu­ture, un­less they make big strate­gic blun­ders, which is highly un­likely,” said Har­min­der Sahni, founder and MD of con­sult­ing firm Wazir Ad­vi­sors. “Hav­ing said that, Ama­zon should be happy with what they’ve achieved so far.”

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