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ONLINE WARS

Amazon has just given a $3-billion reason for Flipkart and Snapdeal to worry

By Itika Sharma Punit

Amazon just upped its game in India.

At a time when domestic e-commerce companies such as Flipkart and Snapdeal are struggling to bring in fresh funds, the American online retailer is boosting its investments in Asia’s third-largest economy.

Seattle-based Amazon will invest an additional $3 billion (Rs20,000 crore) in India, founder and CEO Jeff Bezos has said. In June 2014, Amazon had announced an investment of $2 billion in the country.

“We have already created some 45,000 jobs in India and continue to see huge potential in the Indian economy,” Bezos said in a statement. Amazon did not share further details of its plans.

The announcement was made during a meeting between Indian prime minister Narendra Modi and US business leaders in Washington. Modi is currently in the US on a two-day state visit.

Amazon in India

Within just three years of its launch, Amazon’s India arm—Amazon.in—has become a top player in the Indian e-commerce space, fighting neck-to-neck with the homegrown Flipkart, which began operations in 2008.

Amazon does not break down most of its metrics by geography. But the company has caught up with rivals Flipkart and Snapdeal in the number of items listed on the marketplace—some 35 million as of April. This is the same as Snapdeal and slightly lesser than Flipkart’s 40 million.

Even as some estimates say that Flipkart holds a higher marketshare, Amazon has been catching up. For instance, the two companies were very close in terms of weekly average minutes spent by users on their apps in April. While Flipkart users spent an average 18 minutes, those of Amazon spent 16.9 minutes.

Bezos’s latest announcement will surely give sleepless nights to Amazon’s India rivals.

Faced with devaluation by several investors, Bengaluru-based Flipkart is reportedly struggling to raise funds at its preferred valuation. The company has spoken to at least 15 investors, who have all refused to invest at its asking valuation of $15 billion, Mint newspaper reported in April.

Snapdeal, too, has faced rejection by “several new investors,” the report said.

With this funding, Amazon’s total investment in India will be higher than the total funds raised by Flipkart (around $3.2 billion) and Snapdeal (around $1.7 billion).