Amid pandemic and struggling ecommerce industry, global ecommerce giant Amazon has invested fresh amount in its Indian marketplace unit, Amazon Seller Services.
According to the Ministry of Corporate Affairs filings accessed by Inc42, the company on June 25 allotted fresh 2,309,893,270 equity shares with a face value of INR 10 worth INR 2309.8 Cr to global firm’s Singapore-based entity Amazon Corporate Holdings Pvt Ltd.
The first investment in 2020 came in January worth INR 2,208 Cr, which was closed on January 31. This came after Amazon dropped its investment in Amazon Seller Services to INR 6,200 Cr last year, from the INR 9,450 Cr in 2018.
In the year that ended March 2019, Amazon Seller Services reported a 54.07% Y-o-Y increase in revenue from operations to INR 7,593.5 Cr. Net losses of the firm reduced by 9.57% Y-o-Y to INR 5,685.4 Cr in FY19.
In January 2020, during his visit to India, Amazon chief Jeff Bezos had announced that Amazon is all set to invest $1 Bn in India to support small and medium-sized businesses (SMBs). The programme streamlines the process for sellers including entrepreneurs, SMEs and manufacturers to sell their products across international marketplaces. Amazon also helps the sellers understand the demand patterns in various countries and how to boost their discoverability.
While speaking on the sidelines of the Amazon Smbhav event, Bezos had said that the investment will digitise Indian SMBs and will help them to export goods valuing over $10 Bn worldwide by 2025. And now with this investment, Amazon will look to digitise SMBs in the country.
Bezos had also announced that Amazon has been partnering with thousands of brick and mortar stores across the country, which will act as delivery points. Under its ‘I Have Space’ programme, Amazon has been partnering with kirana stores since 2011. Earlier, Amazon said that it will be investing INR 10 Cr ($1.3 Mn) in its ‘Local Shops on Amazon’ to bring more sellers on board.
In an earnings call recently, Amazon had stressed that the company is going to spend around $4 Bn globally as part of its Covid-19 response. Amazon said that out of the total corpus, the company is going to spend around $350 Mn to hire more employees while increasing their pay to compensate for their services. Amazon is operating at sub-optimal levels due to the shortage of manpower for the last two months, but with the non-essential ecommerce back in action, the firm is trying to spruce up for the lost time.
Further, the investment comes at a time when the Indian government has been asking the ecommerce companies to show the origin of the product amid growing nationalism in the country. This is expected to cause a rumble for Amazon too. Also, with the draft ecommerce policy under the final round of discussions as well, the company may have to relook at its regulatory processes too.