SUMMARY
Amazon Invested $308 Mn In Amazon Seller Services In FY2016-17 While Flipkart Invested $414K In Its Marketplace
In a bid to emerge as the ecommerce market leader in India, Amazon has been pumping in more money in its marketplace as compared to rival Flipkart. However, both of them slashed investments in their respective marketplaces in FY2016-17. As per a recent report, Amazon Invested $308 Mn (INR2,010 Cr) in Amazon Seller Services in FY2016-17 while Flipkart pumped in just $414K (INR 27 Lakh) in its marketplace.
As per their latest regulatory filings made in India and Singapore, total investment into Amazon Seller Services so far stands at $2.29 Bn (INR 14,940 Cr) as compared to Flipkart’s $1.28 Bn (INR 8,349 Cr) through Flipkart Marketplace.
The report states that Flipkart Ltd, the Singapore-based parent of India’s online retail giant, slashed investments into Flipkart Marketplace to $414K (INR 27 lakh) in 2016-17 from about INR $250 Mn (1,629 Cr) in the year before that as it focused on conserving cash amidst a funding slowdown.
Similarly, Amazon’s $308 Mn investment in its marketplace this year was significantly less than the $1.14 Bn (INR 7,643 Cr) it pumped in the year before.
The same trend followed this year as well. Since April, Amazon Seller Services has received around $510 Mn (INR 3,321Cr) in fresh funding. In July 2017, Amazon poured in about $260 Mn (INR 1,680 Cr) in Amazon Seller Services, followed by a $250 Mn (INR 1,620 Cr) infusion this month.
Meanwhile Flipkart’s main commerce unit has received a capital infusion of less than $307K (INR 2Cr) (this does not include Flipkart’s infusions in its fashion unit Myntra) till date.
Flipkart And Amazon: Looking Beyond Ecommerce And Marketplace
While Flipkart and Amazon are locked horn to horn in the ecommerce battle, when it came to spending, Flipkart’s focus was more on slashing costs in FY2017 as it focused on capital efficiency and reducing cash burn. However post the $4 Bn fund raise from investors such as eBay, Microsoft, Tencent and SoftBank, cash burn and spending have increased.
Flipkart recently bolstered its payments arm, PhonePe, with a $38.7 Mn investment. Since January 2016, Flipkart has infused about $163 Mn (INR1,627 Cr) into its logistics unit Ekart. The ecommerce unicorn has allocated $460 Mn to Ekart for the investment deals, as revealed in an August 28, 2017 filing of the parent firm Instakart services Pvt. Ltd. It has also committed $500 Mn for its payments unit PhonePe.
Amazon, which as per industry sources has been burning at least 20% more than Flipkart as it targets aggressive customer acquisition, has been on a spending spree this year. Earlier in August, the ecommerce giant invested $62.7 Mn (INR 400 Cr) in its Indian logistics arm Amazon Transportation Service, ATS. A month prior to that, it had reportedly fuelled $20 Mn (INR 130 Cr) into digital payments entity, Amazon Pay India, as per regulatory filings.
Around the same time, the company received the final nod from the government for its proposed $500 Mn investment in food retail in India. The proposal states that the company will open a wholly-owned subsidiary in India to carry out the business. It is expected to launch the new food retail venture by Diwali.
In the same month, the US-based ecommerce giant Amazon invested about $52.7 Mn (INR 341 Cr) in Indian subsidiary Amazon Wholesale, as per documents filed with the RoC. Back in June, Amazon infused an additional $32 Mn (INR 207 Cr) in Amazon Transportation Services, the logistics arm of Amazon India. In March 2017, Amazon Online Distribution Services (later renamed as Amazon Pay) received $10.5 Mn from its parent company, through its Singapore unit Amazon Capital Holdings and Amazon.com Inc. Ltd, Mauritius.
This month, when Flipkart pumped money into PhonePe, reports came in that Amazon is also looking to increase its investment in Amazon Pay by up to five times. According to the company’s MCA filings, Amazon has already increased the authorised capital of its payments arm from $61.5 Mn (INR 400 Cr) to $307.7 Mn (INR 2,000 Cr) in the last couple of months.
Thus both the ecommerce players are looking beyond their marketplaces and investing in payments and logistics to effectively run their businesses. At present, both Amazon and Flipkart are embroiled in a tug of war as far as ecommerce is concerned. This year’s festive season sale saw more than $1.5 Bn worth of sales across ecommerce platforms, with Flipkart claiming the lead position as per a recent RedSeer Consulting report. However, the battle will further play out in payments and logistics as both the players strengthen their respective plays in those.
(The development was reported by ET)
