Flipkart India & Amazon Inc. to Invest more

Amazon Inc and Flipkart India will invest nearly Rs. 2,300 crore in the near term as they slug it out to acquire more customers in the country’s fast-growing online retail market that’s mostly driven by deep discounts.

As per a spokesperson at Amazon India, the company will invest in technology, creating infrastructure and logistics services, and specifically on the mobile platform to enable their sellers to deliver to customers across the country a wide selection of products very quickly and reliably.

Flipkart, the country’s largest online retailer, approved plans to raise Rs1300 crore through a rights issue to its Singapore-based parent and borrow up to Rs400 crore from Kotak Mahindra BankBSE -0.18 % at a board meeting last week. Two weeks ago, Flipkart’s parent company raised $700 million in fresh funding from existing as well as new investors, pegging its valuation at $11 billion.

Flipkart and Amazon run their websites as marketplaces — connecting buyers and sellers.

They typically burn through cash as they battle to acquire customers by offering goods at very low costs. While this strategy has rattled brick-and-mortar storeowners who have accused online retailers of predatory pricing, it has also resulted in both making losses and requiring fresh funding. Amazon India, which entered India a year ago, had a net loss of Rs. 321 crore while Flipkart’s losses doubled toRs400 crore in the year ended March.