Amazon infuses $242 mn into India units ahead of Jeff Bezos visit

A day before Amazon CEO Jeff Bezos commenced on his India visit on Tuesday, the Seattle headquartered retail behemoth infused a total of Rs 1715 crore, or $242 million at current exchange rates, into two of its business units in the country, showed the company’s latest regulatory filings. 

Amazon Pay, the ecommerce platform’s digital payments vertical in India, received the largest chunk of the investment, pocketing Rs 1,355 ($191 million) from Amazon Corporate Holdings Singapore and Mauritius-registered entity Amazon.com.incs.Limited.

The two entities also injected Rs 360 crores ($51 million) into Amazon Wholesale India, the local B2B arm of the ecommerce major.

Previously, Amazon Pay had received an infusion of Rs 450 crore in June and Rs 600 crore in January last year.

The company, which opened up peer-to-peer payments via the Unified Payments Interface (UPI) through its wallet in April last year, has been incentivising customers through cashbacks for using the wallet to pay utility bills and book tickets for travel.

These incentives have also been extended to payments at offline businesses including More supermarkets, which it acquired along with private equity firm Samara Capital in 2018. It has also become a platform for facilitating fintech services including insurance and EMI.

Amazon Pay competes closely with Flipkart-owned PhonePe and Alibaba-backed Paytm in certain use cases.

Amazon Wholesale generates all of its revenues from wholesale trading. In February, the government barred sellers on foreign-owned ecommerce platforms from sourcing more than 25% of their inventory from group companies. Subsequently, Amazon pared its stake in two subsidiaries, Cloudtail India and Appario Retail, after the new norms became effective. It had briefly suspended the operations of the two arms.

Subsequently, the B2B arm reported an 8% decline in revenues for the financial year 2018-19 at Rs 11,232 crore. Losses widened marginally to Rs 140 crore against Rs 131 crore in the previous year.

In calendar year 2018, the global parent also invested less capital in Amazon Seller Services, the local entity that operates Amazon’s ecommerce marketplace. Against Rs 9,450 crore invested in 2018, it had infused just Rs 2,800 crore till October 2019.

Speaking at Amazon India SMBhav event today during his ongoing India visit, Bezos announced that the company will invest an additional $1 billion to help micro, small, and medium enterprises (MSMEs) and traders digitalise their businesses in India.

In 2016, Bezos had pledged a total of $5 billion investments to Amazon’s India business. 

For Amazon, India is one of the last frontiers for growth in emerging economies across the globe after having lost to local players in China, a highly consumer-centric market that is seen as protectionist and unfriendly to outsiders. 

After Walmart bought Flipkart in May 2018, Amazon now faces a more formidable and equally deep-pocketed rival in India.

Entering the Indian market in 2012, Amazon quickly raced past its other rivals of the time to grab the number two position. By various estimates, Flipkart is still believed to be the market leader in the e-commerce space by a slender margin. Amazon, however, has often countered these claims.

Since 2013, Amazon has set up multiple subsidiaries for payments, logistics, wholesale, food retail and online grocery as a way to expand its India operations. 

Amazon has also spread its footprint in the country through multiple subsidiaries across segments such as fintech, bus aggregation and offline retail, in order to build a larger ecosystem that complements its core e-commerce operations.