EBay India revenue growth falters even as rivals thrive

EBay's revenue grew 23% to `132.10 crore in FY15. Its revenue had grown 33% to `107.60 crore in FY14 from `81 crore the year before

Sayan Chakraborty
Updated15 Jan 2016, 01:24 AM IST
EBay&#8217;s revenue reflects the commission earned by the company from sellers and not the value of goods sold. <br />
EBay&#8217;s revenue reflects the commission earned by the company from sellers and not the value of goods sold.

Bengaluru: EBay India Pvt. Ltd, the Indian arm of California-headquartered e-commerce firm eBay Inc., saw a slowdown in growth for the year ended 31 March 2015, at a time when rivals such as Flipkart, Snapdeal and Amazon are more than doubling their sales annually.

According to documents available with the Registrar of Companies (RoC), eBay’s revenue grew 23% to 132.10 crore in FY15. Its revenue had grown 33% to 107.60 crore in FY14 from 81 crore the year before.

In comparison, Flipkart Internet Pvt. Ltd, the entity which runs Flipkart’s marketplace business, posted a revenue of 772.49 crore in FY15, up from 179 crore the year before, according to documents available with RoC.

EBay’s revenue reflects the commission earned by the company from sellers and not the value of goods sold. E-commere firms charge sellers anything between 5% and 20% of the value of goods as commission, said industry experts. By that measure, gross annual sales at eBay could be in the range of 1,500-2,000 crore.

EBay entered India in 2004 by acquiring Bazee.com, an auction site, much before the likes of Flipkart and Snapdeal (Jasper Infotech Pvt. Ltd) saw the light of day and Amazon set up shop in India. Flipkart was started in 2007, Snapdeal in 2010 and Amazon launched its India operations in 2013.

EBay ceded its early-mover advantage to local rivals who went on a fund-raising spree and spent heavily on customer acquisition. It’s growth in India was crippled by multiple exits at the top management level and limited infusion of funds by the parent.

For instance, the RoC documents show that eBay Inc. pumped in about 650 crore into the India business last year. In comparison, Flipkart raised about $1.4 billion from institutional investors in the last 13 months, while Snapdeal mopped up $1.1 billion in about the same time.

Amazon (Amazon Seller Services Pvt. Ltd) chief executive Jeff Bezos announced in July 2014 that the firm will pump in $2 billion into India. According to documents filed with RoC, Amazon has infused 2,437 crore into its India arm since June.

Such aggressive investment, much of it on customer acquisition and inorganic expansion, has helped these firms drive past eBay. “EBay behaves like a pure platform while the others (Flipkart, Amazon and Snapdeal) behave like retailers. They are going after specific categories and new product launches, so their growth rates are bound to be higher,” said Pinakiranjan Mishra, head of the retail and consumer products practice at EY India, a consultancy firm.

“Hence, for the others, you see more focus on category management, brand building, advertisement and hiring of domain experts, say somebody from an apparel brand. The fundamental philosophy is different, because of which eBay may be growing at a slower pace,” he added.

EBay declined to comment.

“We are in our quiet period till 27 January and therefore not at liberty to respond to your queries,” a company spokesperson said in an email response.

Flipkart reported a 150% year-on-year increase in unit sales in August, while Snapdeal’s gross merchandise value, or value of goods sold on the site, surged 222% in the April-June quarter, Mint reported on 11 August. The e-tailers also made a killing during the festive season. Flipkart claimed gross sales of $300 million during the Big Billion Day sales in October, while Amazon said last Diwali was the “largest ever” since its entry into India, without giving out numbers.

To be sure, Flipkart, Amazon and Snapdeal’s growth has come on a much higher base than eBay’s.

The company tried to firm up its position in India by investing in Snapdeal. Its stake purchase in Snapdeal in April 2013 was seen as eBay’s best bet for building a meaningful presence in India. It held close to a 9% stake in Snapdeal when Japan’s SoftBank Group announced a $627 million investment in the Indian company in October 2014.

EBay sold a third of its stake in Snapdeal for about $50 million to Taiwan-based phone parts manufacturer Foxconn Technology group when Snapdeal raised $500 million last August, Mint reported on 19 August.

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First Published:15 Jan 2016, 01:24 AM IST
HomeCompaniesEBay India revenue growth falters even as rivals thrive

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