#Asia Amazon India losses double, but so do revenues

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amazon

The Amazon logo on its office building in Santa Clara, California. Photo credit: wolterk / 123RF.

Amazon Seller Services, the registered business unit of Amazon India, posted a loss of US$527 million in the fiscal year ending March 2016, as heavy investments and spending took a toll on margins.

However, the company’s revenues also jumped to US$335 million, compared to US$151 million in the same period last year.

In comparison, Flipkart posted revenues of US$288 million, making a loss of US$340 million during the same period. Flipkart’s numbers don’t include revenue or losses from Myntra.

“[The] company has invested in establishing infrastructure, opening new fulfilment centers and technology advancement due to which (the) company’s losses increased to INR3,572 crore,” Amazon said in a filing with the Registrar of Companies.

“[The] company is also investing on launching new products and new services for its customer and its sellers,” it said. Last year, Amazon’s losses were at US$254 million.

Amazon’s biggest expenses were in advertising and promotions, legal fees and salaries, and wages.

The ecommerce giant invested around US$17 million in its Indian marketplace just ahead of the festive season. It has a commitment to spend US$5 billion in India as it takes on local rival Flipkart.

See: Amazon India gets a cool $3 billion more while rivals see funding crunch

While Amazon has been growing at a breakneck speed, a recent report said Flipkart will still hold top spot till 2019. Jeff Bezos’ company, however, has fat coffers, and has made no secret of its plans to keep on investing in India as long as it takes.

Flipkart, meanwhile, has been shopping for a fresh funding round. Industry insiders say it is having trouble raising money at the valuation founders Sachin and Binny Bansal expect.

“Amazon is in a full fledged customer acquisition mode right now and they will continue their pace in 2017. While till now market share shift to Amazon has been from other players like Snapdeal, in 2017 it could be from Flipkart,“ analyst Satish Mena at Forrester Research told The Economic Times.

See: Overcoming the China nightmare: why Amazon needs to win in India, ASAP

Amazon has been going after India so hard it had even dragged the margins of its international operations, Amazon finance chief Brian Olsavsky told investors and analysts after the company posted quarterly earnings in October.

“By far the biggest individual thing is the investment in India that we continue to make and are very excited about it,” Brian had said.

Currency converted from Indian Rupees. 1 USD = 67.83 INR

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