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Amazon pumps in Rs 1,960 crore into its Indian unit to take on rival Flipkart

With big bucks like this flowing in, it is needless to say that smaller e-commerce sites are going to face the brunt.

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Bracing for its umpteenth round against desi e-commerce giant, Flipkart, Amazon has pumped in Rs 1,960 crore into its India unit, Amazon Seller Service. According to The Economic Times, Amazon had put in Rs 8,150 crore alone in 2017-18 and the latest round is the fourth infusion since July last year. The last such infusion was in November 2017 when the US parent site put in Rs 2,900 crore, its single-biggest capital infusion into the Indian market.

These frequent infusions are a result of Amazon's desire to capture the Indian market from its rival Flipkart. This money is likely to be used to acquire new customers and to grow market share. According to reports, Amazon is burning USD 120 million every month, which is higher than its average cash burn of USD 80-100 million in 2016. Out of the USD 120 million, USD 75 million is spent on e-commerce, while USD 45 million is spent on Prime. If the cash burn keeps on continuing, Amazon Seller Services is likely to see more such infusions. 

However, Flipkart has not made any recent infusions but is determined to take on Amazon in terms of logistics.

Amazon has also increased its delivery and fulfilment centres across 13 cities to 41. Amazon Seller Services also has over 250,000 registered sellers on its platform. Competing with these giants is Paytm Mall that is trying to rope in local stores for its online-to-offline model.

The latest infusion only reaffirms Jeff Bezos' USD 5 billion investment commitment to its Indian arm. Amazon is already the second-largest company in India in terms of authorised capital, after Reliance Jio. It has already crossed Vodafone Mobile, Delhi Metro Rail Corporation, Tata Teleservices and L&T Metro Rail, a report by Capitaline, an Indian corporate database mentions.

Both Flipkart and Amazon are expected to battle it out in the grocery segment this year and take on Big Basket where Alibaba and Paytm Mall are set to invest.

With big bucks like this flowing in, it is needless to say that smaller e-commerce sites are going to face the brunt. Chairman of retail consultancy, Technopak Advisors, Arvind Singhal, tells ET that many e-commerce sites are likely to fold up, unless they get more capital.