Home Business Entrepreneurship Amazon’s Soaring Losses May Make The Road Ahead Smoother For Flipkart

Amazon’s Soaring Losses May Make The Road Ahead Smoother For Flipkart


Amazon India, the Indian arm of the global e-commerce giant, has seen a loss of Rs. 3,572 crore in the last financial year as it looks to expand and compete with home-grown rival Flipkart. Although revenue has increased by 123% to Rs 2,275 crore and the customer loyalty base has definitely increased, losses have doubled and threaten to spiral out of control. The figures are from the Financial Year 2015-16, which ended in March this year. During the same time last year, the losses stood at 1,724 crores.

Losses mount for both online giants

The race for gaining the top spot in the Indian e-commerce business, often described as the last great frontier, is presently restricted to two big names; Amazon and Flipkart. Flipkart itself is not doing that well either: they registered losses of Rs. 2306 crore in 2015-16, as this report points out. Flipkart, however, has since then rationalised and trimmed expenses to consolidate its base and not get toppled by these figures. We had reported earlier how Amazon too had raised a sum of Rs. 2010 crores via its parent holding. Only updated Registrar of Companies (ROC) will decide who wins the race for the year, but the fight is still very much on. Additionally, Amazon has committed to investing at least $5 billion in India in the near future.

Amazon India does business in three distinct ways: collecting commissions from third-party sellers, providing marketing services to other firms which are owned by Amazon and the wholesaling of Kindle e-book readers and accessories. Amazon has recently rolled out Amazon Prime services in India to create a bigger subscriber base. Amazon is thus basing its fortunes on warehouses, infrastructure, original video content and logistics, making the prospects brighter for 2017. The main reason both Amazon and Flipkart made losses is due to the enormous sales and discounts to lure customers. The Indian government does not allow FDI in online retail but allows it in physical marketplaces. The war for the online retail business is still raging.

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