Amazon, Flipkart pour cash into India

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Bloomberg New Delhi

AMAZON.COM announced plans to invest $2 billion (about R21bn) in its Indian operations yesterday, just hours after local rival Flipkart Online Services secured $1bn from investors.

The spending would support Amazon’s rapid growth, with India on pace to become the fastest market to reach $1bn of gross sales.

Amazon and Flipkart are building their arsenals to grow their share of India’s e-commerce sales, which CLSA Asia Pacific Markets projects will grow sevenfold to $22bn a year by 2018. India has one of the youngest online populations, with access to the internet surging as more consumers gain broadband connections and smartphone adoption grows faster than China, spurred by the availability of cheap devices.

“We see huge potential in the Indian economy and for the growth of e-commerce in India,” Amazon founder and chief executive Jeff Bezos said. “With this additional investment of $2bn, our team can continue to think big, innovate and raise the bar for customers in India.”

On Tuesday Flipkart raised $1bn from investors including Tiger Global Management, South Africa’s Naspers, Singapore sovereign wealth fund GIC and Russian billionaire Yuri Milner’s DST Global.

The investment is the most raised in India’s e-commerce industry, data show. The money would help Flipkart solidify its place as the largest e-commerce site in India and hold off Amazon and eBay-backed Snapdeal.com.

In May, DST Global led a $210 million fundraising for Flipkart and the Indian company bought clothing site Myntra.com to strengthen its position against Amazon.

Flipkart planned to use the latest funds to acquire mobile application companies and invest in technology, chief executive Sachin Bansal said in a conference call.

“Using big data for creating better experiences for the customers is a key space and we are going to focus on that,” Bansal said.

Flipkart had 22 million registered users and delivered 5 million shipments a month, the company stated.

Amazon entered the Indian market in June last year, and sells over 17 million products from cellphones to furniture.

The company announced plans yesterday to build five new warehouses across the country to facilitate delivery.


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