Amazon’s Nearly Done Investing Its Promised $5 Billion In India As Walmart Challenge Looms

Amazon Inc. has all but ploughed the amount it pledged to expand in India and fend off its local larger rival, the Walmart-controlled Flipkart.

The world's largest e-tailer is nearly $600 million shy of meeting its investment target of $5 billion in the five years that it has done business in India, according to regulatory documents filed with the Registrar of Companies that were reviewed by BloombergQuint.

The investments were made in five entities:

• Amazon Seller Services Pvt. Ltd.
• Amazon Pay (India) Pvt. Ltd.
• Amazon Data Services India Pvt. Ltd.
• Amazon Internet Services Pvt. Ltd.
• Amazon Wholesale (India) Pvt. Ltd.

The e-tailer—owned by Jeff Bezos, the world's richest person—lost out to Jack Ma-led Alibaba and JD.com in China, and has focused on India, where it expanded offerings such as Amazon Music and a localised version of Prime Video.

It also has to contend with other players, homegrown and international, for a share in the pie of India's e-commerce sector. Apart from Flipkart, Alibaba-backed PaytmMall and billionaire Mukesh Ambani's Reliance Retail, among others, are looking to lure customers on to their platforms, where they can coax them to shop for everything—from a trimmer to a smartphone to spices.

Amazon is just getting started, said Arvind Singhal, chairman of retail consultancy Technopak Advisors, adding that most of its expenditure is on building infrastructure for the future. He said that he expects Amazon to get more aggressive with its India investments as the “competitive intensity has increased”.

The e-tailer has committed another $500 million to its food retail business, Amazon Retail India Pvt. Ltd., into which it recently pumped in about $14 million.

Amazon Seller services—which is Amazon India's largest entity and marketplace arm—topped the investment chart with $3.8 billion so far, half of which has already been wiped out. In the fiscals through March 2015-2017, according to the filings, its accumulated loss stands at $1.6 billion. Amazon is yet to file its financials for the year ended March.

To be sure, Amazon has increased the pace of its India investments in the last nine months alone as it has already pumped $1 billion in its marketplace—its largest investment in the shortest time.

Rise In Expenses

Its annual expenses have also shot up. In the fiscals through March 2015-2017, Amazon's annual expenses grew threefold to $1.1 billion, according to the documents.

Singhal said Amazon is being smarter by building the business ground-up, as its investment in India is much smaller than Walmart, which spent $16 billion to acquire Flipkart. He expected Amazon to invest another $5 billion in India. "This time, Amazon will finish its committed investment in shorter time."