Amazon's Huge Investment In India

The American online retailer will invest the money to dominate the Indian E-commerce industry

Amazon aims to make $3 billion investment in India –a market which promises growth to the e-commerce titan. On Tuesday, CEO Jeff Bezos met Indian Prime Minister Narendra Modi in an official meeting in Washington. The CEO announced the company’s plans for the region and stated that it sees “huge potential in the Indian economy.”

The planned investment now rests at $5 billion following the announcement. Almost two years ago, the e-commerce giant has made an investment of $2 billion in the region. Amazon’s representative turned down the request for giving the disclosure of how finances would be allocated or during which time-period. In compliance with the region’s domestic regulations, Amazon operates a pure market in India and delivers only those items put on sale by third parties through its sites.

Nonetheless, the company has delivery and warehouse tech there that are especially tailored to the domestic market, where internet connections can be non-existent and most consumers do not have credit cards.

Last week, at the tech-focused Code Conference in the state of California Mr. Jeff expressed that the company delivers most of its items to customers in the country. In contrast to that, in the US it heavily relies on United Parcel Service, US Postal Service and other organizations. “We’re adapting to the local model,” Mr. Jeff stated during the conference, noting the online retailer has smaller as well as more number of warehouses than in other markets.

In China, the company sufficiently did not model its business for suiting domestic preferences, he stated, which cost it the region’s market share. Overall, the Seattle based organization’s global segment, which includes every market outside the North American region, is growing at a much more slowing rate than its home base’s. Last year, foreign sales grew by 5.7% to a sum of $35.4 billion, in comparison to 25% in the North American region to $63.7 billion.

The web retailer also recorded an overseas operating loss of $91 billion, compared with an operating profit of $2.75 billion in its domestic market. The organization does not divide results in terms of countries. In summer last year, Amazon stated it aimed to set up a data center in the country to serve a huge number of consumers in the second most populated country of the world. The company faces rivalry in the country from locally based emerging companies such as Flipkart Internet Pvt, which is valued at $15 billion, revealed by The Journal.

The planned investment by the company is particularly huge compared to the country’s still small, but quickly expanding market for online shopping. The future will tell whether adapting to the local market turned out to be fruitful for the e-commerce behemoth or not.