Amazon will pump $3B more into its Indian marketplace as it competes with Snapdeal and Flipkart
Amazon plans to put $3 billion more into its Indian e-commerce site, said founder and CEO Jeff Bezos. The investment was announced Tuesday evening at the U.S.-India Business Council’s 41st Annual Leadership Summit in Washington D.C., where Bezos and other business leaders met with Indian Prime Minister Narendra Modi.
In a press release from the U.S.-India Business Council, Bezos said Amazon “has already created some 45,000 jobs in India and continue[s] to see huge potential in the Indian economy.”
Amazon India’s main rivals are marketplaces Flipkart and Snapdeal, both of which have significant venture capital banking. According to CrunchBase, Flipkart has raised $3.15 billion so far from investors including Naspers, Tiger Global, DST Global, and Accel; Snapdeal has received about $1.54 billion from backers such as Chinese e-commerce giant Alibaba, SoftBank, and eBay.
A February report by Morgan Stanley said that Flipkart was the leader by gross merchandise volume (GMV), with 45 percent market share in 2015. Snapdeal came in second with 26 percent, and Amazon India took third place with 12 percent.
Both Flipkart and Amazon India, however, have claimed to be the largest e-commerce marketplace in India by user traffic. At the end of last year, comScore released data showing that Amazon India had more than 30 million unique visitors to its site during Diwali holiday sales in October, which Bezos said made it the most visited e-commerce site in India.
Flipkart then responded with data that claimed its main marketplace and clothing site Myntra (which Flipkart acquired in 2014) received 63 percent of total mobile commerce traffic in December, compared to 15.86 percent for Amazon India, and 13.84 percent for Snapdeal.
But Flipkart is now facing questions about its GMV growth and ability to continue competing with Amazon India. Morgan Stanley, an investor in Flipkart, recently cut the marketplace’s value to $9.4 billion, down from the $15.2 billion valuation it claimed last year after a $700 million funding round.
The heated competition comes at a high cost for all of India’s largest e-commerce players. For example, all three have invested huge amounts of money in logistics, a weak point in India’s commercial infrastructure, and also have to balance tight margins with offering competitive prices.