Amazon's India marketplace FY17 loss widens as costs climb

Amazon's India marketplace FY17 loss widens as costs climb
Photo Credit: Shah Junaid/VCCircle

Amazon Seller Services Pvt. Ltd, the Indian online marketplace arm of Inc., sank deeper into the red in the year through March 2017 as it continued to spend heavily in a bruising battle with main local rival Flipkart.

The company's standalone net loss widened to Rs 4,830 crore for 2016-17 from Rs 3,680 crore the year before, show filings with the Registrar of Companies. Total expenditure rose 34% to Rs 7,815.6 crore from Rs 5,859.4 crore.

Operating revenue rose 41% to Rs 3,128 crore from Rs 2,218 crore.

An email seeking comment from Amazon did not get a response till the time of publishing this report.

However, a company spokeswoman had said in November, when it first disclosed its revenue for 2016-17, that the overall revenue includes income from sources other than its core marketplace business where it earns fees and commissions from sellers.

“Comparing like to like, the Amazon marketplace revenue in India grew by 105% for the year ending March 31, 2017. The annual returns filings include other line items,” the spokeswoman had said.

Amazon Seller Services runs the e-commerce marketplace, including a sellers’ network. While sellers’ commission and services account for its core operational revenue, it also earns revenue through services provided to its parent.

Also on Thursday, Flipkart Internet Pvt. Ltd, which operates the marketplace of homegrown e-commerce major and Amazon's main local rival Flipkart, reported that its consolidated loss had narrowed to Rs 1,640.2 crore in the financial year 2016-17 compared with Rs 2,305.7 crore in the previous fiscal. 

Operating revenue (consolidated) increased 15% to Rs 1,882.4 crore in 2016-17 from Rs 1,635.1 crore the previous fiscal, according to filings with the Registrar of Companies.

Earlier this month, Amazon pumped Rs 2,600 crore (around $393 million) into its Indian unit ahead of US retail giant Walmart's announcement that it would acquire Flipkart for $16 billion.

The latest infusion brought Amazon's total investment in Amazon Seller Services Pvt. India to more than Rs 20,000 crore.

Amazon had earlier committed to invest $5 billion (around Rs 32,500 crore) in its Indian operations.