Amazon India sees FY16 loss soar to Rs3,572 crore
Amazon India’s revenue doubles to Rs2,275 crore following heavy spending on marketing, discounts and investments in technology and infrastructure
Latest News »
- Opening bell: Asian markets open higher; Axis Bank, Asian Paints, Hero Moto in focus
- United Spirits slips on cocktail of highway ban and GST uncertainty
- Kansai Nerolac paints a better picture in Q1
- Steel stocks at highest in years, thanks to China
- Ambuja Cements: higher realizations save the day, but unlikely to sustain
Bengaluru: Online marketplace Amazon India’s revenue more than doubled in the 2015-16 fiscal year, but so did its loss, as the Indian unit of the Seattle-based Internet giant went all out to topple local arch-rival Flipkart from its No. 1 position.
After splurging heavily on marketing, discounts and investments in technology and infrastructure, Amazon India reported revenue of Rs2,275 crore for the year ended March 2016, compared with Rs1,022 crore in the previous year.
The firm’s loss soared to Rs3,572 crore from Rs1,724 crore in the previous year, according to regulatory documents sourced from data platform Tofler.
Amazon India also said its authorized share capital stood at Rs16,000 crore and paid-up share capital at Rs9,629 crore. Amazon.com Inc. increased the authorized share capital of its Indian unit by more than four times in the space of 12 months, highlighting how aggressively the company was moving in a bid to win the e-commerce market share battle in India, widely seen as the world’s last remaining major Internet market.
Amazon had initially committed about Rs3,500 crore at the beginning of the 2015-16 fiscal year. Amazon has so far committed to investing at least $5 billion in India.
“Company revenues grew more than double as compared to last financial year. (The) company has invested in establishing infrastructure, opening new fulfilment centers and technology advancement due to which (the) company’s losses increased to Rs3,572 crore,” Amazon said in the documents. “(The) company is also investing on launching new products and new services for its customer and its sellers. (The) company is confident on its future growth.”
Amazon India did not immediately respond to an email seeking a comment on the latest numbers.
In an interview last week, Amazon India vice-president and country manager Amit Agarwal indicated that the e-commerce company would focus more on increasing market share and scaling up its infrastructure in India rather than worrying about profitability in the near term.
“It’s very easy to make money in e-commerce. Making money is not hard. We are singularly focused on building the foundation of what would be a massive business—and when you want to do that at extreme scale, you need to make significant investments in technology and innovation for the customer experience,” he said. “You need to make significant investments in the infrastructure for the ecosystem and the reach. And India is very early in that journey...”
Amazon India generates sales in three ways—collecting commissions from third-party sellers; providing marketing services to other Amazon-controlled firms; and the wholesaling of Kindle e-book readers and accessories.
Last week, Mint also reported that Cloudtail India Pvt. Ltd, a joint venture between Amazon and Infosys co-founder N.R. Narayana Murthy’s Catamaran Ventures, posted a fourfold rise in revenue to Rs4,591 crore in the year ended March and received fresh funds. Cloudtail is Amazon’s largest seller in India and accounts for at least 25% of its overall sales in the country.
The firm’s latest numbers will alarm local rivals Flipkart and Snapdeal as it highlights the breakneck pace at which the company is grabbing market share in India.
Flipkart Internet Pvt Ltd., the marketplace arm of Flipkart, had posted a revenue of Rs1,952 crore for 2015-16—lower than Amazon’s numbers during the year. Flipkart posted a loss of Rs2,306 crore during that period.
However, the numbers reported by Amazon, Flipkart and Snapdeal can’t be directly compared as the three companies have set up complex holding structures to comply with Indian regulations, which ban foreign direct investment in online retail, but allow it in marketplaces.