Amazon’s investment spree in the Indian market continues to be a drag on its international business. The Seattle based e commerce giant reported an operating loss of $481 million for the quarter ending March 2017 compared to $121 million during the same period a year ago.
In the quarter ending December 2016, the company had reported an operating loss of $487 million for its international business. International sales were $11 billion, up $1.5 billion over first quarter of last year. The global e-commerce giant’s net sales increased 23% to $35.7 billion in the first quarter of 2017, compared to $29.1 billion in first quarter 2016. India figures as a key factor for Amazon’s losses in international business as it aggressively invests in the local market where it is fighting the likes of homegrown rival Flipkart. Throughout last year, Amazon launched multiple global programmes in India including its popular subscription-based service Prime, which is priced much cheaper here compared to the US market. Recently, it also launched Fire TV Stick optimised for Indian customers with integrated voice search.
“Our India team is moving fast and delivering for customers and sellers. The team has increased Prime selection by 75% since launching the programme nine months ago, increased fulfilment capacity for sellers by 26% already this year, announced 18 Indian Original TV series, and just last week introduced a Fire TV Stick optimised for Indian customers with integrated voice search in English and Hindi,” said Jeff Bezos, CEO, Amazon.
“We’re grateful that customers are responding -Amazon.in is the most visited and the fastest growing marketplace in India. It’s still Day 1 for e-commerce in India, and I assure you that we’ll keep investing in technology and infrastructure while working hard to invent on behalf of our customers and small and medium businesses in India, Bezos said.
When asked about the company’s India focus impacting margins of its international business, company CFO Brian Olsavsky said, “Sure. I can’t quantify it, or break it out specifically, but I will say it’s a large factor as well as a couple other things in the international segment. So, keep in mind that we launched Prime Video in the fourth quarter, and now we have that in over 200 countries and territories.”
Amazon is expected to be burning close to $1 billion in India annually , to ward off rival Flipkart which has just closed a funding round worth $1.4 billion setting the stage for intensified fight between these two players.