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Amazon India Gets $630 Mn Boost: Should Flipkart Be Worried?

Amazon India Gets $630 Mn Boost: Should Flipkart Be Worried?

Amazon will be investing the largest chunk in its Amazon Seller Service

The company will focus on marketing and promotion, along with other aspects

Amazon has recently released its performance report for FY19

After filling its annual performance report for the financial year ending in March 2019, Amazon has now decided to infuse $630 Mn (INR 4,472.50 Cr) into three of its Indian businesses — Amazon Pay, Amazon Retail and Amazon Sellers Service.

According to business intelligence platform Paper.vc, Amazon will be investing INR 3,400 Cr in Amazon Seller Services, INR 900 Cr in Amazon Pay India and INR 172.50 Cr in Amazon Retail to push them more aggressively in the Indian market.

Amazon Seller Services, which runs the marketplace, reportedly got the largest chunk to spend on more discounts, promotions and marketing. Whereas Amazon Pay will continue the cashback and focus on adding more merchants.

It is to be noted here that Amazon India’s rival Walmart-owned Flipkart is also focusing on similar segments.

Is Amazon Gearing Up To Take On Flipkart?

Flipkart launched its digital payments platform Phone Pe and is currently the most popular unified payments interface (UPI) platform in the country, followed by Google Pay. In August 2019,  Flipkart’s PhonePe had registered 342 Mn transactions, whereas Google Pay was at 320 Mn. Another player in the market is Paytm, which recorded 157 Mn transactions in the same month.

As per media reports, Amazon Pay has received close to INR 2,771 Cr since its launch in 2016. However, it still hasn’t been able to make a mark. To make it much more user-friendly, Amazon recently integrated its voice assistant Alexa with the digital payment platform, allowing users to make payments using voice commands. 

Moreover, looking at the retail segment, Flipkart, on October 8, registered a food retail platform Flipkart FarmerMart, which will sell locally-produced and packaged food products directly to customers. The company is currently working on licensing and other legal processes.  According to media reports, Flipkart will be investing close to INR 2,500 Cr on the platform.

Recently after the much-awaited festive season sale, Amazon got shocker after RedSeer dissected the revenue generation during the six-day sale. According to the Bengaluru-based consultancy firm, ecommerce had generated $3 Bn (INR 19K Cr) of the gross merchandise value (GMV). 

The report also highlights that Flipkart led the ecommerce market, with a 60-62% share in the total GMV. The share went up to 63% when sales by Flipkart’s group entities Myntra and Jabong are taken into account. Amazon India, on the other hand, only accounted for 28-30% of the share in this GMV.

By pushing deep discounting and focusing on promotions and advertising, the company reportedly wants to toughen up the competition. 

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