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India spends burn a hole in the global biz for Amazon 2017

Although the stocks of Amazon rallied post the latest fourth quarter results, the ecommerce giant has ended the year with an international loss of $3 billion. This loss is largely attributed to its India spends. Amazon had reported losses of $1billion in the same period a year ago. According to the results filed by the company, it reported a loss of $919 in the final quarter of 2017 in the International business which is less than the third quarter loss of Amazon at $936 million.

Due to the increasing intensity of the competition with the homegrown rival Flipkart, the ecommerce giant had already incurred losses amounting to $2.1 billion for the global business. Amazon has been aggressively investing in India in order to build infrastructure and bring popular global products at discounted rates. It also introduced Alexa and Prime at promotional rates and is in the final stage of launching Prime Music and the audio book business Audible.

Brian Olsavsky, CFO, Amazon told the analysts post the results that India is a good story for Amazon. It has had a lot of growth in the past year and more Prime members joined India’s Prime program in the first year than in any other country in the history of the world. After starting the subscription service Prime in 2016, Amazon claimed that it had 25 million items under the program in India. The company has also been pumping capital across the businesses in the country at regular intervals which shows the significance of the market for Amazon.

Sales from its international business have moved to $54.3 billion as compared to $43.9 billion in 2016. The company reported a growth of 38% in net sales at $60.45 billion for the quarter ended 31st December. There was an initial investment commitment of $2 billion by Amazon’s founder and CEO Jeff Bezos; this increased the allocation for India by another $3 billion in 2016.

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