Amazon Seller Services clocks 105% revenue growth in FY17
Bengaluru: Amazon India said on Wednesday that revenue at its marketplace arm more than doubled in the year ended March, as the online retailer expands rapidly in a country where it is locked in a bruising battle with local rival Flipkart.
Amazon Seller Services’s revenue rose 105% in the year, said an Amazon India spokeswoman, although regulatory filings by the company showed an increase of only 41%. The spokeswoman said the difference in growth was due to one-time charges, which she declined to specify.
“Comparing like-to-like, Amazon’s marketplace revenue in India grew by +105% for the year ending March 31, 2017. The annual returns filings include other line items,” the spokeswoman said, without revealing the exact comparable figures.
According to its latest regulatory filings with the ministry of corporate affairs, Amazon Seller Services posted revenue of Rs3,129 crore in the year to March, compared with sales of Rs2,217 crore in the previous year.
The Indian unit of US giant Amazon.com Inc. is spending hundreds of millions of dollars to fund both its rapid expansion in India, as well as discounts, advertising and logistics support in the battle for market share with Flipkart.
Amazon India said the latest figures in its annual report are not comparable on a like-to-like basis with last year’s numbers, due to what the company refers to as “inter-company charge-outs”.
Inter-company charge-outs basically refer to revenue that Amazon India separately earns from its parent company. Amazon India typically generates sales in three ways—primarily by collecting commissions from third-party sellers through its marketplace arm; providing marketing services to other Amazon-controlled firms; and, wholesaling of Kindle e-book readers and accessories.
These one-time charges can include services such as marketing and advertising. For instance, for providing marketing and advertising services to the parent company, Amazon India used to charge the entire amount it spent on those services. Over the past 18 months, as Amazon’s business in India matured, the local arm has taken on a majority of those costs and charged its parent a much lower amount compared to previous years.
Most recently, in August, Amazon India said it posted an 88% jump in gross sales volumes for the June quarter.
For Amazon, India is arguably its most important international market and conquering the Indian e-commerce market has become a top priority for CEO Jeff Bezos, especially after Amazon lost out to Alibaba in China.
According to executives at Amazon, the company is unlikely to let up on its pace of investment in India. Earlier in November, Mint reported that Amazon India had nearly doubled its authorized capital to Rs31,000 crore ($4.74 billion), nearly matching its mammoth capital commitment of $5 billion made in June last year. Separately, Amazon also infused Rs2,900 crore ($443 million) into Amazon Seller Services, making it at least the third such capital infusion this year.
“I think our investments are still squarely in the same three areas—how do we add more selection, how do we make it easier for sellers to offer more competitive prices and how do we build for faster deliveries... A layer on top of that is that we keep investing in Prime—so video, music, Echo, etc, are our key areas,” Amazon India chief Amit Agarwal had said in an interview earlier on 27 October.
The American retailer is facing a much stiffer competition from Flipkart, which handily beat Amazon India during a bitterly-fought festive season face-off last year, ending a slump in its fortunes.
In September, Flipkart pulled off an encore of its festive season performance in 2016.
Amazon has repeatedly disputed the claim that it lags Flipkart and has asserted that its way of calculating gross sales could be different from that used by Flipkart. Gross sales refers to the value of goods sold on a platform, not net revenue.