Amazon had invested Rs 11,400 crore ($ 150 million) in the Indian marketplace, payment, and wholesale business units during FY 2019-20.
Legendary e-commerce company Amazon (Amazon) invested Rs 11,400 crore ($ 150 million) in the Indian marketplace, payment, and wholesale business units during FY 2019-20. Amazon made this investment to increase its share in the digital commerce market of the country. The company continued this investment despite losses. According to the information provided in the regulatory filing, Amazon Seller Services, Amazon Wholesale (India), Amazon Pay (India), and Amazon Transportation Services had a loss of Rs 7014.5 crore in FY 2018-19 which increased to 7899 crores in the next financial year 2020. Done.
An Amazon spokesperson commented that they are investing based on an investment strategy based on the long-term view. This will make e-commerce and other types of digital products and services easily available to Indian customers.
Amazon Seller Services Losses 5849.2 Crore
In the financial year 2020, Amazon Seller Services suffered a loss of Rs 5849.2 crore, Amazon Wholesale (India) Rs 133.2 crore, Amazon Pay (India) Rs 1868.5 crore, and Amazon Transportation Services Rs 48.1 crore. In the financial year 2018-19, Amazon Internet Services had a net profit of Rs 71.1 crore but in 2019-20 it lost Rs 20 lakh. According to the regulatory filings, the total expenses of Amazon Pay increased 62 percent to Rs 3234.8 crore in FY 2019-20 compared to the previous financial year, while Amazon Seller Services’ total expenditure increased by 25 percent to Rs 16877.1 crore in the same period.
Announcement of investment of 7 thousand crores this year
In January 2020, Jeff Bezos, the founder of Amazon, had announced that he would invest $ 100 million (Rs 7,000 crore) in India to bring online small and medium-sized businesses across the country. Earlier Amazon had said that it would invest 550 crores in India, which is the most important market for it outside the US.
Increased loss on expenditure on advertisements and promotions
According to Anchal Aggarwal, CEO and founder of business intelligence platform Tofler, all Amazon units in the country, except Amazon Wholesale, have expanded by 40-50 percent in FY 2019-20. According to Aanchal, Amazon is investing in India to expand all its business units and has increased spending on promotions and advertisements for Amazon Pay. Amazon’s loss has increased due to increase in advertising and distribution expenses.
According to Anchal Agarwal, Amazon Seller Services received the most investment in the financial year 2019-20. Amazon invested Rs 8408 crore in three phases and its revenue increased by 42 percent to Rs 10847.6 crore in FY 2020 as compared to FY 2019. Amazon Wholesale received an investment of 360 crores, Amazon Pay received an investment of 2705 crores. The revenue of Amazon India’s marketplace, payments, transport and cloud service units increased 47 percent to Rs 19275.8 crore in FY 2020 from FY19.
Amazon wholesale revenue fell due to government policies
The revenue of Amazon Wholesale (India) stood at Rs 3384.6 crore in FY 2020 compared to Rs 11231.6 crore in FY 2019. Amazon Wholesale (India) reported in the filing that the new policies of the government led to a decline in the revenue of Amazon Wholesale (India). Amazon Internet Services revenue increased 57.8 percent to Rs 4161.6 crore in FY 2020 from FY 2019. (India) revenue grew 63.1 percent to Rs 1315.7 crore and Amazon Transportation Services revenue increased by 42.7 percent to Rs 2950.9 crore.
Reliance is getting tough competition
Amazon’s rivalry in the Indian e-commerce sector is against Walmart-owned Flipkart. Apart from this, it may also face challenges from Mukesh Ambani-owned Reliance Industries as Reliance is moving fast in the e-commerce sector. Reliance has entered the e-commerce market with Geomart.
Reliance Retail Ventures Limited (RRVL) has raised an investment of Rs 47265 crore by selling its 10.09 per cent stake. Apart from this, Amazon has invested in Unlisted Future Coupons Limited. Amazon dragged Future Group to the Singapore International Orbitation Center (SIAC) over the Reliance and Future Group deal. Kishore Biyani-owned Future Group entered into an agreement with Reliance in August 2020 for the sale of its retail, wholesale, logistics and warehousing units.