Amazon to make India its biggest market outside US with a whopping $5bn investment!

The world's largest online retailer, Amazon will make India its biggest market outside the US and add instant video and subscription-based eCommerce services for high-end buyers in the country later this year, reported the Economic Times.

According to two people who are familiar with the company's decision, the eCommerce giant is readying a $5-billion war chest to grow India into its biggest market.

Amazon will invest most of the additional Rs 31,700 crore — a year ago, it committed to invest $2 billion in its India operations — in expanding its network of warehouses and data centres and beefing up its online marketplace to give tough fight to companies such as Flipkart, Snapdeal and Paytm, the people aware of its plans said.

The company turned 20 last week, and has completed two years in India, where its business is now worth at least $2 billion in gross merchandise value on the eCommerce side, and includes fast-growing revenue from top Amazon Web Services (AWS) customers in the country.

A person aware of the company’s plan said: "Our biggest financial backer (Amazon founder Jeff Bezos) doesn't need a fresh pitch while deciding every new investment — we are really long on India, investment figures are easily in multiples of billion dollars."

The eCommerce firm wants to start its ambitious Amazon Instant Video (AIV) service in India this year and has started conversations with music labels and producers for sourcing content. In December, it hired Nitesh Kripalani, a former Sony Entertainment executive, to lead its new initiatives.

For India's three biggest eCommerce firms — Flipkart, Snapdeal and Paytm — Amazon's fresh investments and aggressive new launches will result in cutthroat rivalry and pile pressure on their valuations as they seek more funds from venture capital investors.

Already, the top three Indian ecommerce giants have raised around $5 billion among them, with Flipkart garnering nearly $3 billion in more than one dozen funding rounds. Investors are often enthused by the Indian Internet market, which according to a Morgan Stanley report, could rise to $137 billion by 2020.

"Unlike us, Amazon doesn't have to get worked up on upcoming valuations, or getting a fresh investor in every round — they can keep funding to ensure the others in the market bleed," said an executive at one of the Indian ecommerce companies. He also pointed to high cash burns for Flipkart, which is estimated to be around $2 million daily.

(Image: Reuters)