Amazon invests ₹11,400 crore in India in FY20

US e-commerce giant Amazon has pumped in over ₹11,400 crore (about USD 1.5 billion) during FY2019-20 across its marketplace, payments and wholesale business units in India to bolster its position in the country's burgeoning digital commerce market.

Data analysis from regulatory filings by various Amazon entities showed that Amazon Seller Services, Amazon Wholesale (India), Amazon Pay (India) and Amazon Transportation Services saw their losses adding up to ₹7,899 crore in FY20 as against a loss of ₹7,014.5 crore in the preceding fiscal.

Amazon Seller Services, Amazon Wholesale (India), Amazon Pay (India) and Amazon Transportation Services had registered losses in FY20 at ₹5,849.2 crore, ₹133.2 crore, ₹1,868.5 crore and ₹48.1 crore, respectively.

Amazon Internet Services, which had clocked a net profit of ₹71.1 crore in FY19, slipped into the red with a loss of ₹20 lakh in FY20, the data showed.

The e-commerce giant, which has been investing millions of dollars towards promotions, building infrastructure and logistics as it woos customers to shop online, has seen its losses mount on account of higher expenses.

Filings showed that Amazon Pay's total expenses grew 62 per cent to ₹3,234.8 crore in FY20, while Amazon Seller Services saw its total expenses rising over 25 per cent to ₹16,877.1 crore in the said period.

In response to a detailed query sent to the company, an Amazon India spokesperson said: "We continue to be invested in India with a long-term view enabling customers in India to enjoy the ease and convenience of e-commerce and other digital products and services."

In January this year, Amazon founder Jeff Bezos had announced USD 1 billion (over ₹7,000 crore) investment in India to help bring small and medium businesses online. Previously, the online retail giant had committed USD 5.5 billion investments in India, one of Amazon's most important markets outside of the US and a key growth driver.

Amazon, which has been locked in a bruising battle for market leadership with Walmart-owned Flipkart, also faces competition from Mukesh Ambani-led Reliance Industries that has been bolstering its position in the country's retail segment. The competition is set to intensify further as Reliance Retail Ventures Ltd (RRVL) has raised ₹47,265 crore by selling 10.09 per cent stake, giving it more firepower to compete against the global giant.

Interestingly, Amazon - which has invested in the unlisted Future Coupons Ltd - had dragged Future group to arbitration at Singapore International Arbitration Centre (SIAC) after the indebted Kishore Biyani group firm signed a pact to sell retail, wholesale, logistics and warehousing units to Reliance in August this year.

Anchal Agarwal, CEO and Founder of business intelligence platform Tofler, said with the exception of Amazon Wholesale, other Amazon entities in India have expanded by about 40-50 per cent in FY2019-20.

"Amazon International has also been funding these businesses to provide adequate capital for expansion. Amazon has increased spending on advertising and promotion of Amazon Pay, the digital payments business. They are also stressing significantly on expansion of Amazon Seller business, the marketplace that grew by 40 per cent in FY19-20," she said. However, the losses of the group have increased on account of increasing advertising and distribution expenses, she added.

On the funding front, Amazon Seller Services - the e-commerce marketplace unit in India - was the biggest beneficiary of the fund infusion, receiving ₹8,408 crore in three tranches. The unit saw revenue from operations rising over 42 per cent to ₹10,847.6 crore in FY20 over the preceding fiscal.

Amazon Wholesale - which is the B2B unit - received ₹360 crore funding, while Amazon Pay received ₹2,705 crore in three tranches during FY20.

Amazon India's marketplace, payments, transport and cloud service units saw their cumulative revenue from operations rising 47 per cent to ₹19,275.8 crore in FY20 over the previous financial year.

Amazon Wholesale (India), however, saw its revenue from operations falling from ₹11,231.6 crore in FY19 to ₹3,384.6 crore in FY20.

In its filing, Amazon Wholesale (India) had attributed the drop in revenue to "new government regulation resulting in lower customer adoption." The filing noted that the company management is in process of expanding the business, and expressed confidence for future growth.

Amazon Internet Services saw revenue from operations rising 57.8 per cent to ₹4,161.6 crore, Amazon Pay (India) by 63.1 per cent to ₹1,315.7 crore, and Amazon Transportation Services by 42.7 per cent to ₹2,950.9 crore in FY20 over the previous fiscal.