Amazon to invest $5 billion to capture Indian online shopping market

In other news, Amazon.com has reportedly announced to roll out two new services in India by the end of 2015: Instant videos, and subscriptions for Amazon Prime services. After committing a staggering $2 Billion for its India operations last year, Amazon has now announced several other service launches in India, apart from another whopping $5 Billion, which it plans to invest over the course of next few years, reports ET. The company is planning to invest up to $5 billion in the country, according to a report in India’s Economic Times. The investment will majorly help expanding its network of warehouses and data centres.

Announcing the $2 billion injection a year ago, Amazon chief executive and founder Jeff Bezos said the online giant’s Indian arm had already exceeded expectations, hosting, at the time, over 17 million products on its platform. The company will offer instant video and subscription-based e-commerce services for Prime users.

Amazon, which turned 20 last week, has completed two years in India, where its business is now worth at least $2 billion in gross merchandise value on the e-commerce side, and includes fast-growing revenue from top Amazon Web Services (AWS) customers in the country. A Morgan Stanley report in February suggested that the Indian internet market as a whole is expected to raise $137 billion by 2020.

Besides, Amazon has started conversations with music labels and producers for sourcing content to launch Amazon Instant Video (AIV) service in India. The graph below depicts how Flipkart is relatively paying a higher price in the name of customer acquisition as compared to Amazon and Snapdeal. Therefore, they are now taking the aggressive expansion stance for the Indian market. He said, “Overall, the bet on India will pay off well for Amazon it’s a high-volume, low-margin business in the United States; Amazon India will be similar”. The fresh round of investments along with the new verticals is Amazon trump card when it comes to establishing a lead in the Indian market. “So, while we shouldn’t expect Alibaba-like financials from India, Amazon will find that India nicely complements its efforts in the USA”.