Amazon Pumps $16.7 Mn Into Logistics Arm To Upscale Delivery Services

Amazon Transportation Services reportedly received over $92.4 Mn (INR 675 Cr) in multiple tranches

Amazon's transportation unit's revenue grew to reach $217.25 Mn in FY18

The company runs 67 fulfillment centres across 13 states in India

With the wave of festive season sales rolling in, US-based ecommerce company Amazon, has invested $16.7 Mn (INR 122 Cr) in its logistics arm Amazon Transportation Services (ATS).

Till date, Amazon Transportation Services, which was launched in March 2015, has received an investment of over $92.4 Mn (INR 675 Cr) in multiple tranches.

According to Registrar of Companies filings for FY18, Amazon’s logistics arm recorded nearly 60% revenue growth year-on-year.

For FY18, revenue grew to $217.25 Mn (INR 1,574 Cr) from $135.53 Mn (INR 991 Cr), a year back.

With logistics being vital to Amazon’s delivery promises under its Prime service, which offers same day delivery, 2-4 hours delivery etc, the company is looking to scale up its delivery capacity and gain an edge in the highly competitive Indian ecommerce space.

To date, Amazon has established 67 fulfillment centres in the country, which cover an area of 20 Mn cubic feet of space in 13 Indian states. The company has recently launched new centres in Bengaluru, Mumbai, Delhi, Vijayawada and Kolkata.

Amazon’s Plan For Faster Logistics

Recent reports showed that Amazon is planning to introduce its Project Armada in India. The project, which was earlier launched in the US, allows sellers to use their own delivery trucks.  In order to achieve this, the company has already partnered with some logistics companies in India who will be leasing vehicles to sellers.

Earlier this year, the platform was also planning to further strengthen its logistics service by using geotagging and latest technologies including artificial intelligence (AI) and machine learning (ML)

Recently, Amazon announced its financial results for the quarter ending September 30, 2018 which stated that the platform’s growth in international business including India had slowed down to 13% as compared to 27% in Q2 and 34% in Q1. Late Diwali sales in India were one of the major reasons attributed for this slow down.

Amazon’s logistics service faces competition from Flipkart’s ekart service. In March, Flipkart announced that it will establish a logistics centre in Kolkata, spread across 80 acres, to cater to deliveries in East and North East.

Development in the logistics space is at the heart of the rapid growth in the ecommerce space. According to a Deloitte report, the Indian logistics sector is expected to grow at a CAGR of 17% to reach $6.5 Bn (INR 48,000 Cr) by 2023.