Amazon Unleashes $5 Bln Warchest. Instant Video, Subscription Based Ecommerce Services Coming Soon

Amazon is pumping in another $5 billion into their Indian operations, to unleash a blitzkrieg of new offers, features and campaigns. They have already crossed $2 billion in revenues in India, and overtook Flipkart to become India’s most visited ecommerce portal.

Amazon India has spent two years in this country, and last year in July, they had announced investment of $2 billion. It is not yet clear whether this new war chest of $5 billion would include earlier $2 billion investment or exclude it.

Unlike other ecommerce portals like Flipkart and Snapdeal, Amazon India has a unique advantage of being self-financed. Hence, they are not required to jack-up their valuations or convince stake-holders to invite another round of investment. Jeff Bezos is already bullish on Indian expansion of Amazon, and they are aware of the need to put pressure on their rivals.

Amazon has declined to officially confirm this news, as they can reveal their plans next week, during declaring their financial results.

Amazon Prime & Instant Video In India

As part of their new expansion plan, Amazon India may introduce their subscription based ecommerce service: Amazon Prime, which can be a value-addon for their new and existing customers.

With Amazon Prime, customers can get 2-day assured delivery, exclusive digital downloads and lots of other benefits. It can be compared with Flipkart First, wherein customers pay Rs 500/yr to get exclusive offers and some special treatment. Although no digital downloads are offered by Flipkart, Amazon has lots of offer right from books to songs and movies.

Another major inclusion into their Indian operations can be Amazon Instant Video, which is on-demand video streaming service currently offered in United States, United Kingdom, Japan, Austria and Germany. They have already tied up with HBO for streaming movies and television series, on-demand.

Amazon Prime customers get Instant Video bundled into their package; otherwise its available as standalone service as well.

Earlier this year, we had reported that Amazon India officials are in talks with major Indian studios such as Yash Raj Films, Eros Entertainment and Sony to bring their content online, under a paid subscription service.

$5 billion investment would also be used to increase their warehouses, update logistics and enhance their marketplace to counter Flipkart, Snapdeal and PayTm, which are their biggest competitors in India. Amazon Web Services can also get a new makeover in India, with addition of new Cloud based Datacenters across the country.

But Challenges Are There..

Despite experiencing stellar growth and goodwill in India, Amazon faces several challenges which can hinder their growth. One of the biggest challenges it faces is related with tax issues, especially in Karnataka, where they have established their Indian headquarters.

For launching Prime and Instant Video services, they will need to have a robust infrastructure in place, which is absent in India. Considering that Tier 2 and 3 towns are the locations where most of the ecommerce companies are experiencing growth, they can suffer a lot as 1 billion Indians are still without Internet, and our average speed is second slowest in entire Asia.

Issues pertaining to theft are also recurring, as recently, an Amazon warehouse employee was found ordering pressure cookers and sending expensive gadgets such as iPad, iPhones to his own address.

Owning to a series of thefts, and illegal detention of their employees, Amazon had stopped delivering high value products in Uttar Pradesh.

None the less, the best thing is that Amazon is aware of the incredible market opportunity which exists in India, and is leaving no stone unturned to capitalize it to the fullest. After this announcement of $5 billion investment, the ecommerce market will certainly warm up, and we can be ensured of intense competition; will that translate to more discounts and more freebies?

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