As Walmart talks to Flipkart, Amazon may invest $2 bn more in India

Including the fresh $2 billion fund infusion plans, total capital committed by the US-based online retail giant in its Indian arm stands at $7 billion

FP Staff September 29, 2016 11:41:37 IST
As Walmart talks to Flipkart, Amazon may invest $2 bn more in India

The war between the two US online and offline retail giants - Amazon and Walmart - is getting bigger and bigger by each passing day. This is becoming very much evident in terms of their rising fund commitment towards the potentially growing Indian market in a bid to outdo each other.

Amazon, the Jeff Bezos-controlled US online retail giant, has said it will invest another $2 billion in its Indian arm as competition intensifies in the country's e-commerce sector, a BusinessLine report said. The fresh fund commitment is in addition to the $5 billion capital the company has already earmarked for the country.

As Walmart talks to Flipkart Amazon may invest 2 bn more in India

“We continue to look at India as a key growth region and are committed to invest aggressively with a long-term horizon, and transform the way India buys and sells," BusinessLine reported quoting Amazon India spokesperson.

This comes a day after news reports said Walmart, the US-based and world's largest retail behemoth, is in advanced negotiations to invest $1 billion in India's largest online retailer Flipkart in return for a small stake in the latter.

The crucial committments by the two US-based firms come ahead of the start of the festival sale offers by India's top online marketplace companies, including Amazon India.

The top three ecommerce firms - Flipkart, Amazon and Snapdeal - have committed to spend heavily on advertising and marketing, besides promising big incentives to their top suppliers against discounts likely to be offered by them on several products during the upcoming festive sale offers.

Amazon, which operates through Amazon.in in India, will flag off its 'Great Indian Festival' sale from 1 October, with total spend on its marketing and advertising likely to be more than two-three times of its rival Flipkart. The marketing and advertising budget of Amazon India is expected to be around Rs 125-130 crore.

In order to woo customers, Flipkart said it will be spending Rs 30 crore on marketing and advertising of this year's Big Billion Day sale. In fact, the biggest spend for rebranding activities has come from Snapdeal, which said has invested Rs 200 crore on this exercise. Both, Flipkart and Snapdeal will host their sales between 2 and 6 October.

Besides these three players, other marketplace entities such as Alibaba-backed Paytm and Shopclues, too, will be holding their big-bang festival season sales alongside their large peers in the first couple of weeks of next month in order to cash in on the growing enthusiasm of online buyers in recent years.

A recent Bank of America Merrill Lynch Report pegged Flipkart as the leader with over 43 percent market share. It forecast that in 2019, Flipkart would be able to retain the share to 44 percent, with Amazon gaining to 37 percent and Snapdeal's share falling to just 9 percent. In 2015, Amazon has 21 percent market share and Snapdeal 14 percent.

According to a report by Kotak Institutional equities, Indian e-tailing market could reach $28 billion by 2019-20, registering a compounded annual growth rate of 45 percent over the next four years. Despite the strong growth estimates, gross merchandise value in the June quarter dropped 7 percent to $13 billion as against 21 percent rise to $11.5 billion in the same quarter last year.

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