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Amazon's international business posts 29% jump in losses, led by India, but remains bullish on the country

While Amazon yesterday announced a profit of $1.6 billion in the quarter ending March 2018 - double of what it had posted a year ago - the losses continue to mount in the e-tailer's international business, mostly on account of India.

twitter-logo BusinessToday.In        Last Updated: April 27, 2018  | 12:14 IST
Amazon's international business posts 29% jump in losses, led by India, but remains bullish on the country

While Amazon yesterday announced a profit of $1.6 billion in the quarter ending March 2018 - double of what it had posted a year ago - the losses continue to mount in the e-tailer's international business, mostly on account of India.

According to The Economic Times, Amazon reported a jump of 29 per cent in its overseas business losses to $622 million for the quarter under review, up from $481 million in the corresponding period last year. However, the company has previously posted far worse global figures - it had reported a loss of $936 million in the quarter ended September 2017.

The report added that the Seattle-based company's international sales increased by 34.5 per cent (year-on-year) to $14.8 billion in the March quarter, faster than the 29 per cent growth in the December quarter and the 15-16 per cent growth in the first two quarters of 2017. Last year, Amazon posted a loss of $3 billion for its international business, up 134 per cent from $1.28 billion in 2016, while international sales jumped from $43.9 billion to $54 billion.

Though the rivalry with homegrown e-commerce leader Flipkart is bleeding both companies, Amazon continues to aggressively focus on India. In his latest annual letter to shareholders, Amazon's head Jeff Bezos listed India among the company's "recent milestones" saying that "Amazon.in is the fastest growing marketplace in India and the most visited site on both desktop and mobile".

He also mentioned that Prime added more members in India in its first year than any previous geography in Amazon's history. Incidentally, 13 years post-launch, Prime members globally now exceed 100 million. "Prime selection in India now includes more than 40 million local products from third-party sellers, and Prime Video is investing in India original video content in a big way, including two recent premiers and over a dozen new shows in production," said the letter.

The same bullish attitude on India was reiterated on an earnings call after announcing the results. "We'll continue to invest in India where we're seeing great progress with both sellers and also customers. And we like the momentum we've seen there," said Brian Olsavsky, the company's CFO, adding, "We're adding local content in India, video content. We're also adding other benefits, Prime benefits. We're rolling out devices there, and we're seeing Indian developers developing skills for Alexa."

So the bottomline is that the mounting losses in India aren't going to scare Amazon away. In fact, yesterday it announced plans to set up five more warehouses in as many cities, including Bengaluru, Gurgaon and Mumbai, in order to strengthen its delivery capabilities and take on Flipkart. With this new addition, Amazon will have 67 fulfilment centres in 13 states, with a total storage capacity of over 20 million cubic feet, it said in a statement. These FCs are scheduled to be fully operational before the festive season of 2018 but the company did not disclose any investment details. But it's likely part of the $5 billion war chest that Amazon has earmarked for India.

With PTI inputs

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