Amazon doubles its war chest to take on Flipkart
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.
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.
“As of now, the battle between Flipkart and Amazon is too close to call,” said Harminder Sahni, founder and MD of consulting firm Wazir Advisors.
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