Amazon hits back at Flipkart with $2B Indian investment

Steven Loeb · July 30, 2014 · Short URL:

Announcement comes one day after Flipkart raised a record-breaking $1 billion funding

The Indian e-commerce space is big, and growing, and the battle between Amazon and Flipkart for supremacy over it is about to get pretty interesting. Just a day after Flipkart raised a nearly record breaking funding round, Amazon is already swooping in to undercut them.

On Wednesday, Amazon announced plans to invest $2 billion in its Indian operations in order to "support its rapid growth and continue to enhance the customer and seller experience" in the country.

“We see huge potential in the Indian economy and for the growth of e-commerce in India,” Amazon CEO Jeff Bezos said in a statement. “India is on track to be our fastest country ever to a billion dollars in gross sales.”

This news comes just a day after Flipkart, India's largest e-commerce company, raised an incredible $1 billion funding round, the largest amount ever raised by an Indian Internet company and second only globally to Uber's $1.2 billion funding round in June. Investors included Tiger Global, Naspers, Accel Partners, Morgan Stanley Investment Management, Sofina and GIC.

E-commerce in India is big business: in all, the space was worth $13 billion last year. Flipkart alone has reached over $1 billion in sales, also has about 4,000 sellers on its marketplace. Flipkart has 18 million registered users, and 3.5 million daily visitors to its site. It has 22 million registered users and delivers 5 million shipments a month.

Since its launch in India a year ago, Amazon says that it has now "grown to be India’s largest store." It has over 17 million products on sale and serves millions of customers across India.

Flipkart is currently way out ahead of Amazon in terms of actual market share. After buying up online fashion retailer Myntra for $300 million in May, the combined companies have a 9% of share of the $2.8 billion worth of transactions made in the Indian e-commerce market last year. Amazon, on the other hands, had only a 1.6% share. 

Still, Amazon sees big growth potential in the country, and it could soon become a real competitor for Flipkart.

"With this additional investment of US $2 billion, our team can continue to think big, innovate, and raise the bar for customers in India. At current scale and growth rates, India is on track to be our fastest country ever to a billion dollars in gross sales," Bezos said. "A big ‘thank you’ to our customers in India – we’ve never seen anything like this."

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