Amazon may be at the top of the e-commerce food chain but it looks like some of the new players from China—and, more likely, India—are giving them a run for their money. The Seattle-based company has reported at least $541 million in losses in the third quarter (ending in September), which is more than double its [$208 million] loss from the same period last year. But, even with such a drop, the company will continue to hold its expenditures through the current fiscal year.
And the company is looking for ways to corner the markets it does not yet have. For example, Amazon Chief Financial Officer Brian Olsavsky shares, “By far the biggest individual thing is investment in India,” indicating the company is “very excited about the initial reaction from both customers and the sellers. That is essentially the international margin guidance in Q4.”
He goes on to say, “We are very encouraged by what we see in India but it is still very early on. Our most recent highlights will be the launch of the Prime programme in the past quarter, and it is now one of the top-selling units on Amazon India,” noting that the company is committed to aggressive investing in a long term scale in an attempt to “transform how India buys and sells.”
And why not; after all, Amazon.com made the same contribution to the way America buys and sells.
Still, this is the most significant operating loss in Amazon’s international business in the company’s entire history. And since Amazon could not break into China (because the country is already dominated by Alibaba.com), India is the next logical step.
Amazon’s most recent report states that they are losing approximately $1 billion in India, annually. But in June, Amazon founder and CEO Jeff Bezos originally announced plants to scale up investment of the company in India (yes, even in the face of pending losses), an effort that equates to more capital raised by local competitors Snapdeal and Flipkart, combined.
Forrester Research forecast analyst Satish Meena comments, “Winning the India market will be expensive, and Amazon knows this. From the last six months their burn rate has increased, which is now showing in the results.”
On the other hand, the holiday season is approaching and Amazon can typically rely on the next few months to shore up some of these losses.