We all know online shopping in India is growing at a very fast clip. At the same time, there is an intense competition in ecommerce space, especially among the top 3 players. Another aspect that everyone is probably aware about is, all this aggressive pricing and discounts are being paid by Venture Capitalists’ pockets.
Flipkart, Amazon and Snapdeal, all of them have raised investments or have commitments of $1 Billion or more. This money is being burned to acquire new customers, offer discounts and pump up products on offer. While we are all aware that these sites are losing money, you will be amazed to know the quantum of loss these ecommerce players have incurred.
Check out these 2 graphs below and be stunned.
Note: All figures are in INR Crore
Please note that the revenue figures above are not the price of products sold (GMV), as these are all marketplaces, and their revenues come from commissions they get from sellers or listing fees that they charge to list the products on their site.
GMV or Gross Merchandize Value represents the price of products sold and net revenues is just a fraction of that!
Flipkart leads the race with net revenue of 179 crore followed by Amazon at 168.9 crore and Snapdeal at 154.11 crore.
However, when it comes to losses, Flipkart leads by a much bigger margin and their loss for 2013-14 stands at Rs. 400 Crore. Comparatively, Amazon losses are pegged at Rs. 321.3 crore and Snapdeal had least losses of 3 with 264.6 crore
See the graph below to understand how much loss each player incurs for every rupee in net revenues.
Flipkart leads the race here to losing 2.23 rupees for every 1 rupee of revenue. Amazon loses 1.90 and Snapdeal has least amount of losses at Rs. 1.72.
The question is, how long can this sustain – In my view not very long.
What do you think?