Friday, July 19

Amazon India Unit Suffers Heavy Losses

Amazon Seller Services, the Indian unit of US e-commerce retailer Amazon has witnessed a growth in their losses by 31% in the financial year 2016-17 reaching up to Rs. 4,830.6 crore. This is because of the exaggerated investments in the country in order to fight against its competitor, Flipkart.

The Amazon Seller Services handles and operates a marketplace that assists the sellers to sell their products online in India and globally as well. Though due to investments, the company suffered losses, the revenue from the sales saw a rise of 43%, from Rs 2,276 crore in 2016 to Rs 3,256.6 crore in the year ended March 2017. In 2015-16, the Bengaluru-based unit suffered a net loss of Rs 3,679.9 crore.

Where the competitor company Flipkart succeeded in lowering its losses to Rs 1,638.6 crore in 2016-17 against a net loss of Rs 2,306.5 crore in the previous financial year, Amazon India is watching its expenses grow in delivery charges (from Rs 1,510 crore to Rs 2,549 crore), employee benefits (from Rs 500 crore to Rs 781 crore), reimbursement of damages to fulfilled inventories, payment processor fees and much more. Also, Flipkart’s internet saw an increase in its total income by 15.46% to Rs 2,253.5 crore in FY17 from Rs 1,951.7 crore in the previous financial year.

In the filing, Amazon said, “The company has invested in establishing infrastructure, opening new fulfillment centers and technology advancement due to which (the) company’s loss increased to Rs 48,306 million. The company is also investing in launching new products and new services for its customer and its sellers.”

The e-tailor Amazon has been facing cut-throat competition with rival Flipkart for a long time with the aim of achieving leadership in the Indian market. It has been putting in considerable efforts and funds to resolve all its issues, improve infrastructure and add solutions to enhance consumer and seller experience. The fight is expected to strengthen in future as the retail giant Walmart took hold of about 77 percent stake in Flipkart for roughly USD 16 billion. However, amid all the loses, the company is still sure about its growth and success in the future. So now, it might be quite interesting to see whether Amazon will win this battle or not.