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Amazon, Flipkart, Snapdeal go aggressive, run into losses

Mon, Jan 25, 2016, 03:03 PM
What is the secret of e-commerce that the companies in India are aggressively going about their business despite losses? Amazon's net loss from India was put at Rs.1724 crore for last year and the company is trying to inject fresh funds.

Amazon Seller Services registered a six-fold increase in sales to Rs 1,022 crore in 2014-15 from Rs 169 crore a year earlier, according to a filing with the Registrar of Companies on Saturday. The company earns income from seller commissions, advertisement revenue and sales of its Kindle e-reader. A year ago, it had a net loss of Rs 321 crore.

The Big 3 online firms -- apart from Amazon, Flipkart and Snapdeal -- reported a net loss of Rs.5,052 crore last year, by offering deep discounts, aggressive marketing and advertising. As the companies raced to capture the market, their profitability had taken a big hit.

Flipkart reported a loss of Rs.2000 crore last year as against a loss of Rs.715 crore in the previous year. Jasper Infotech, which runs Snapdeal.com, reported a loss of Rs.1328 crore last year.

Amazon, which claims to be the largest visited site and had the fastest growing shopping app, said it would inject Rs.1,696 crore through a rights issue into Amazon Seller Services. Amazon would thus be pumping in all Rs.4800 crore.

Amazon is adding 40,000 products a day and 90% of its sellers use its logistics and warehousing services. The company expects India to overtake Japan, Germany and the UK to become its largest overseas market. Amazon may invest $5 billion in India this year.

India's e-commerce market is expected to grow to $103 billion by 2020 from $26 billion now. The number of internet users has quadrupled in the country to 400 million, of whom 10% are engaged in online shopping.

It seems these e-commerce giants see the light at the end of the tunnel, or their losses maybe inflated.
Agency: Ap7am Desk
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