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Amazon injects fresh capital of Rs 650 crore in Wholesale India unit this festive season

Amazon, the US-based e-commerce conglomerate, has invested Rs 650 crore (~$87 million) in Amazon Wholesale (India), according to regulatory filings. This comes just after it dedicated Rs 1,000 crore (~$134 million) in its Indian payment subsidiary, Amazon Pay, in early November.

Amazon logo in background with Shopping Trolley in foreground

Courtesy: Reuters

On October 26, 2021, Amazon Corporate Holdings Pvt Ltd and Amazon Inc made notable investments in the Wholesale division, according to documents filed with the Ministry of Corporate Affairs. The funds were geared to facilitate the e-commerce business in integrating a more robust fund chest in order to support its wholesale B2B operations in India.

Amazon leverages its wholesale division as a distribution channel, sourcing products directly from brands. It then sells these to third-party vendors through their online marketplaces. Flipkart, which is owned by Walmart, also operates its own B2B distributor, Flipkart India.

The e-commerce behemoth has been investing heavily in strengthening its infrastructure and, as a result, its presence in India, one of the world’s largest e-commerce marketplaces. It has already invested Rs 450 crore in Amazon Pay India, its payments unit.

In a highly competitive market dominated by players like PhonePe and Google Pay, Amazon Pay tends to lag far behind. The investments will assist it in building up a strong presence in India’s fintech industry. It has also forged a strategic partnership with MakeMyTrip, an online ticketing company, to provide travel services on the app and website, simplifying the online ticketing experience for passengers. In 2019, the company introduced its domestic flight booking platform.

Amazon also injected fresh funds around Rs 1,460 crore (~$193 million) into Amazon Seller Services in October 2021. Seller services is a platform that facilitates sellers in selling their products online in India and around the world. In terms of infrastructure, Amazon India had grown its fulfillment center network and expanded its storage capacity by 40 percent for its pre-Diwali sale, with over 60 fulfillment centers across 15 states offering 43 million cubic ft inventory to its sellers.

While Amazon secured almost $400 million in cumulative capital infusions before the festive season, its prime competitor Flipkart garnered $3.6 billion in a second-time investment from Softbank group. A significant chunk of the funds (nearly $2.5 billion) was projected to be allocated during the season sale period.

A report from consulting firm RedSeer Consulting suggests, brands sold $4.6 billion in items online during the festive season. With a 64 percent market share, Flipkart dominated the festive season sales, while Amazon came in second with 28 percent.

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