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Amazon most-visited e-com site, but losses widen
28 Jan '16
3 min read
E-commerce major Amazon's Indian arm, Amazon India has claimed that its portal was the most-visited commerce site in the country and also had the fastest-growing shopping app among all e-commerce companies in 2015.
But the company's revenues have taken a hit with net loss ballooning to Rs 1,724 crore in the year ended March 2015, up from Rs 321 crore a year ago, even as it 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.
The combined losses of the three major online firms including Flipkart and Snapdeal have risen to Rs 5,052 crore as they hunted for buyers by offering deep discounts.
An Amazon spokesperson said that at the end of the third quarter of 2015, the company witnessed 500 per cent growth in volume, and in Q4-2015 it sold more than in the entire year in 2015. “We are committed to investing aggressively with a long-term horizon and transforming the way India buys and sells,” the spokesperson said.
Last week, Amazon said it would inject Rs 1,696 crore through a rights issue into Amazon Seller Services, making it the biggest infusion of capital since it entered Indian three years ago. With this investment, Amazon would have pumped in about Rs 4,800 crore into the entity in the past year.
The Indian unit of the world's largest consumer marketplace added products at the rate of 40,000 a day last year and 90 per cent of its sellers use its logistics and warehousing services.
Amazon India's widening losses are in line with a Credit Suisse report. According to the report, while the market opportunity is sizeable, most e-commerce segments have severe competitive dynamics and the current strategy seems to be to build a moat around themselves by scaling up and outsizing their competitors and in this process, incurring heavy losses. A bulk of Amazon's expenses was due to higher advertising, sales and promotion costs of almost Rs 1,405 crore, almost equivalent to the combined marketing spends of Godrej Consumer, Dabur and Marico.
Amazon India's legal expenses, too, were substantially higher than most companies at Rs 221 crore as it faced tax issues and counterfeit claims. (SH)
But the company's revenues have taken a hit with net loss ballooning to Rs 1,724 crore in the year ended March 2015, up from Rs 321 crore a year ago, even as it 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.
The combined losses of the three major online firms including Flipkart and Snapdeal have risen to Rs 5,052 crore as they hunted for buyers by offering deep discounts.
An Amazon spokesperson said that at the end of the third quarter of 2015, the company witnessed 500 per cent growth in volume, and in Q4-2015 it sold more than in the entire year in 2015. “We are committed to investing aggressively with a long-term horizon and transforming the way India buys and sells,” the spokesperson said.
Last week, Amazon said it would inject Rs 1,696 crore through a rights issue into Amazon Seller Services, making it the biggest infusion of capital since it entered Indian three years ago. With this investment, Amazon would have pumped in about Rs 4,800 crore into the entity in the past year.
The Indian unit of the world's largest consumer marketplace added products at the rate of 40,000 a day last year and 90 per cent of its sellers use its logistics and warehousing services.
Amazon India's widening losses are in line with a Credit Suisse report. According to the report, while the market opportunity is sizeable, most e-commerce segments have severe competitive dynamics and the current strategy seems to be to build a moat around themselves by scaling up and outsizing their competitors and in this process, incurring heavy losses. A bulk of Amazon's expenses was due to higher advertising, sales and promotion costs of almost Rs 1,405 crore, almost equivalent to the combined marketing spends of Godrej Consumer, Dabur and Marico.
Amazon India's legal expenses, too, were substantially higher than most companies at Rs 221 crore as it faced tax issues and counterfeit claims. (SH)
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