As competition in the Indian e-commerce market intensifies with online retailers depending on heavy discounts, the race for higher market share has taken a toll on Amazon Inc’s international business. The Jeff Bezos-led company’s operating loss for international markets widened to $724 million during the quarter-ended June, compared with $135 million in the corresponding period last year. India and China comprise a major chunk of Amazon’s international segment.
The international business hurt the company’s overall performance, pulling down the net profit by 77 per cent on year to $197 million. In its filing with the US Securities and Exchange Commission, Amazon said: “As international e-commerce and other online and web services grow, competition will intensify. Local firms may have a substantial competitive advantage because of their greater understanding of, and focus on, the local customer, as well as their more established local brand names. We may not be able to hire, train, retain, and manage required personnel, which may limit our international growth.”
Amazon’s chief financial officer Brian T Olsavsky said that the company would continue its investment in India. “…as I mentioned, we continue to invest in India. We’re very hopeful with the progress we’ve made with sellers and customers alike in India and we see great momentum and success there, so we continue to invest and we have some of our best people in that business,” according to the call transcript available on seekingalpha.com. In June 2016, during his India visit, Bezos had committed an additional investment of $3 billion, taking the total announced investment in India to $5 billion. In India, the e-commerce market has seen high-decibel developments in the recent past. Flipkart raised $1.4 billion from eBay, Microsoft and Tencent in April, and is in the process of acquiring Snapdeal. One97 Communications, which operates Paytm Mall, also raised $1.4 billion from SoftBank.