Losses almost double in third quarter to $936 million due to big spending here
Bengaluru: Amazon’s international losses nearly doubled in the third quarter due to its aggressive investments in its India business, but then the booming domestic ecommerce market has started contributing significantly to the global ecommerce giant’s total international sales.
Amazon’s international losses jumped to another record high in the quarter ended September, swelling to $936 million from $541 million in the corresponding year-earlier period. Overall sales grew 35% to $43.7 billion, boosted by a 28% growth in international sales to $13.7 billion.
“India has a lot to contribute to the international sales for Amazon,” said Satish Meena, senior forecast analyst at Forrester Research. “The (ecommerce) market in India has grown, and Amazon is focussed on new buyer addi- tion, especially from tier-III (cities) and beyond. It is also focussed on retention, and a 70% retention rate is impressive.” According to Amazon India, 70% of the customers who had shopped on its marketplace during the festive season sales of 2016 continued buying on its platform through the year. India remained the main focus for Amazon internationally, with the online retail giant launching its Echo and Alexa devices as well as expanding Amazon Business here, in addition to getting more shoppers to subscribe to its Prime service. “We have had more Prime members join in India than in any other country in the first 12 months (of launch). We have free shipping on 10 million items (in India) and we are continuing to add benefits: Prime Video, Amazon Family,” chief financial officer Brian Olsavsky said in an earnings call late Thursday. “We had the first Prime Day (an exclusive sale for Prime members) this year, Prime Music, Amazon Business is also expanding in India... We also recently announced Echo and Alexa in India. So that should be well received by the Indian consumer base.”
Last year, Bank of America Merrill Lynch said in a report that Amazon India would be the company’s largest market outside of the US, accounting for more than one-fifth of its total international sales by 2025. It estimated Amazon India will hit $81 billion in gross merchandise value (GMV) and $2.2 billion in operating profits by then.
Amazon India declined to comment on the earnings call. In an earlier interview this week, Amazon India head Amit Agarwal told ET that the company was running a marathon here and focussed on adding new customers.
“India is a large investment for us. When we say we are running a marathon, it’s because ecommerce in India is itself small. Amazon India is already the largest contribu- tor of new customers to Amazon. For any new large initiative that Amazon does, we give ourselves a few years,” Agarwal said, adding that the company was looking to build an ecosystem around innovations such as Amazon Pay and Echo, its smart speaker.
Amazon introduced its AIbacked Echo devices in India last month, which founder Jeff Bezos mentioned in the quarterly results. Echo devices are powered by Amazon’s intelligent voice assistant Alexa.
“In the last month alone, we have launched five new Alexaenabled devices, introduced Alexa in India, announced integration with BMW, surpassed 25,000 skills, integrated Alexa with Sonos speakers, taught Alexa to distinguish between two voices, and more. Because Alexa’s brain is in the AWS cloud, her new abilities are available to all Echo custo- mers, not just those who buy a new device,” said Bezos, Amazon’s CEO.
ET reported last week that Amazon has invested 79% more in its marketplace in India than Flipkart has in its retail platform.
The total investment in Amazon Seller Services stood at .₹ 14,940 crore, compared with Flipkart’s .₹ 8,349 crore in Flipkart Marketplace, according to their latest regulatory filings made in India and Singapore. Since April, Amazon Seller Services has secured Rs 3,300 crore in fresh funding while Flipkart’s main commerce unit has received capital infusion of less than Rs 2 crore. Since 2016, Amazon has infused .₹ 1,381 crore into Amazon Data Services, .₹ 716 crore into its wholesale arm, .₹ 497 crore into the payments business, and .₹ 274 crore into its transport business.
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