Strategy

Amazon’s India Investment Rises To $5 Billion

“We have already created some 45,000 jobs in India and continue to see huge potential in the Indian economy,” CEO Jeff Bezos says.
Katie Kuehner-HebertJune 8, 2016

Amazon is investing an additional $3 billion in services for India to capitalize on the rapid growth of e-commerce in that country, bringing its total ante to $5 billion.

“We have already created some 45,000 jobs in India and continue to see huge potential in the Indian economy,” the firm’s chief executive Jeff Bezos said in a news release issued by the U.S.-India Business Council. Bezos, along with other CEOs and India’s Prime Minister Narendra Modi, were attending the council’s annual meeting in Washington, D.C.

While an Amazon spokesman later declined to detail how the new funds would be allocated or over what period, the e-commerce giant last summer disclosed that it planned to open a data center in India.

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“Amazon operates a pure marketplace in India, due to local rules, selling only goods offered through its website by third parties,” The Wall Street Journal said. “It nonetheless has warehouse and delivery technologies there that are particularly attuned to the local market, where internet connectivity can be spotty or nonexistent and many consumers don’t have credit cards.”

Bezos last week told the technology-focused Code Conference that Amazon does most of its deliveries to customers in India, in contrast to the U.S. where it relies heavily on the U.S. Postal Service, UPS and others.

The e-commerce market is growing rapidly in India, where consumers bought $16 billion worth of goods online last year, up from $6.3 billion a year earlier, according to Morgan Stanley estimates. Indian startups competing with Amazon include Flipkart and Snapdeal.com.

“Amazon is injecting cash into its Indian arm at a time when its local competitors have found it difficult to raise cash,” the WSJ wrote. “Investors have tightened the purse strings in recent months as startups burned through millions of dollars every month funding deep discounts on everything from smartphones to religious idols.”

So far, Amazon has been growing more slowly in its international markets than in North America, with overseas sales rising just 5.7% in 2015 to $35.4 billion, compared with 25% in North America to $63.7 billion.

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