2 min read.Updated: 28 Oct 2017, 12:45 AM ISTSalman SH
Amazon's losses widened 73% year-on-year as it stepped up investment in India, a key market where it is locked in a market share battle with Flipkart
Bengaluru: E-commerce giant Amazon Inc.’s international loss rose substantially in the September quarter, as the online retailer steps up investment in India, a key focus market where it is locked in a bruising market-share battle with well-funded local rival Flipkart.
International loss increased 73% year-on-year to $936 million in the quarter, said Amazon, which is investing heavily in areas such as digital payments, video and music content, and the Alexa-integrated smart home devices for its expansion in India.
The online retailer’s overall net sales jumped 34% to $43.7 billion and overall consolidated profit increased marginally from a year ago to $256 million, it said on Thursday.
Amazon recently launched a range of Echo speakers with Alexa, its intelligent personal assistant, in India, and forged an alliance with domestic manufacturer BPL for integrating Alexa into the latter’s home appliances and devices. Amazon India is expected to come out with more such partnerships with domestic electronics manufacturers.
In a post-earnings conference call with investors, Amazon’s chief financial officer Brian T. Olsavsky said the Diwali sales in India along with Prime Day sales internationally had boosted the company’s sales in the September quarter.
“We had the first Prime Day there this year, Prime Music, Amazon Business is also expanding in India. So, a lot of positive momentum and investment going on in India, very pleased with that. We also recently announced Echo and Alexa are available in India. So that should be well received by the Indian consumer base," he added on the call.
Amazon India chief Amit Agarwal said in an interview on Thursday that the company plans to invest in key segments like digital payments and the Prime membership programme. Amazon has already committed an investment of $5 billion in India, and spent over $2 billion expanding its business in the country.
“I think our investments are still squarely in the same three areas—how do we add more selection, how do we make it easier for sellers to offer more competitive prices and how do we build for faster deliveries. I don’t think we do anything else," said Agarwal on Thursday. “A layer on top of that is that we keep investing in Prime—so video, music, Echo, etc are our key areas."
Olsavsky added during the conference call that the online retailer’s international expansion plans are primarily focused on India.
“We launched Prime there a year ago, if you remember, and we’ve had more Prime members join in India than in any other country in the first 12 months. We have free shipping on 10 million items there and we’re continuing to add benefits; Prime Video, Amazon Family," he said.
The competition between Amazon India and cross-town rival Flipkart is expected to intensify, with both companies having multi-billion-dollar war chests at their disposal. Flipkart has already raised nearly $3 billion this year alone in two separate tranches from investors such as SoftBank Group Corp., Tencent Holdings Ltd, eBay Inc. and Microsoft Corp.
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