Amazon To Invest $2B In India To Expand Operations, A Day After Flipkart Raises $1B

Online retail giant Amazon.com Inc. (NASDAQ:AMZN) said Wednesday that it will invest $2 billion in the Indian market to expand its operations in the country’s rapidly growing e-commerce segment.

Although the Seattle-based company did not say when it would begin the fund flow, Amazon's announcement comes a day after Flipkart, which is India's largest online retailer, said it raised $1 billion from various investors. Amazon, which also faces competition from California-based eBay Inc. (NASDAQ:EBAY) in India, is trying to gain a toehold in India's $2.3 billion e-commerce market.

"We see huge potential in the Indian economy and for the growth of e-commerce in India. With this additional investment of US $2 billion, our team can continue to think big, innovate, and raise the bar for customers in India,” Jeff Bezos, founder and CEO of Amazon.com, said in a statement Wednesday, adding: “At current scale and growth rates, India is on track to be our fastest country ever to a billion dollars in gross sales.”

Amazon, which offers over 17 million products across 28 categories in India, also said in the statement that its Indian operations have exceeded the company's expectations from the market. The online retail giant allows other businesses in India to sell their products through its website as it is not allowed to sell directly to the customers, due to India’s policies governing foreign online retailers. And, the company’s third-party merchants have increased to 6,500 from 100 a year ago, Mint, a local newspaper reported.

Last year, Amazon generated sales worth nearly $75 billion, of which nearly 40 percent was driven by its operations in Germany, Japan and UK. However, the company, which has struggled in the Chinese market, posted a loss of $126 million in the June quarter, and is working to generate half of its sales from outside North America, according to Mint.

Amazon had said Monday that it will open five new warehouses in India, a move that would double the company’s storage capacity to half a million square feet. Amazon entered the Indian market in 2012 with the launch of Junglee.com, a website that helped Indian retailers reach out to their target audience by advertising for free on the site.