Flipkart India, the wholesale entity of the country’s largest online retailer is being given a raw deal! With a loss that accounts to a staggering nine-fold, the retailing giant owned by US-based Walmart Inc., had a tough financial year.
According to regulatory filings of the two main entities that control the India business i.e., Flipkart India and Flipkart Internet, the eCommerce giant faces downfall over Rs 3,200 crore for the financial year ended March 2018. This combined loss swells out to be 70 percent higher than the last year.
In consonance with regulatory reports sourced from Tofler, Flipkart India’s revenue reached Rs. 21,658 crore in FY’17-18, a rise of 39 percent as compared to Rs. 15,569 crores in the previous year but the gasp-worthy nine fold loss widens up to Rs. 2,065 crores.
On the other hand, Flipkart Internet’s total revenue was Rs 3060 crore in FY 2018, compared to Rs 2254 crore a year ago.
Therefore, the combined revenues of Flipkart’s two entities stood at 24,717 crore in FY18, up 38.6% from 17,822 crore in FY17.
Flipkart India is a B2B arm of the Indian eCommerce major while Flipkart Internet is the e-commerce platform mostly shoppers interact with.
Flipkart India – Unsatisfactory Report Card
One of the two different entities of the Indian eCommerce giant, Flipkart India – the B2B arm – displays a total downfall of Rs. 2,065 crores which are fairly a big amount and is considered a dramatic leap compared to Rs. 245.05 crores in the financial year 2017.
At the same time, Flipkart Internet shows a loss of Rs. 1160.6 crores for the financial year 2018, that accounts for a decline by 29 per cent than the record of the previous year which stands at Rs. 1,640,2 Crores.
Now the loss of these two Flipkart entities — Flipkart India and Flipkart Internet— combined altogether amounts to Rs. 3,200 Crores for the ongoing financial year.
Their biggest expenses are spread across people (Rs 1,030 crore), advertising (Rs 720 crore), storage and logistics (Rs 590 crore). Advertising expenses dipped by over 20 per cent, indicating a growing focus towards bringing costs under control. – Tofler co-founder Anchal Agarwal.
Altogether, Flipkart India’s revenue grew by 42 per cent in the fiscal year 2018, while the Flipkart’s marketplace witnessed a surge by 36 per cent in terms of revenue. Adding to the woes along with perks is the subsuming increase in their total expenses. Flipkart India’s saw an increase by over 50 per cent. Considering the whole expense of this eCommerce giant, employee benefit costs span across to Rs. 330 crores, compared to Rs. 166 crore the previous year.
The stats in this recent report card marks the sheer deceleration of the company. The company claims that this difference in both the fiscal year is due to lower logistics, storage services, as well as a decline in other expenses.
The Prolonged Spending War!
Flipkart has been in the spotlight after the American retailing giant Walmart sealed the deal, acquiring the poster boy of the e-commerce revolution in about 77 per cent stake for nearly US$16 billion. In return, this blockbuster deal has been a Northstar with big, fat returns from investors like SoftBank, Naspers, eBay, etc.
However, what remains an underlying truth is that the bruising battle for dominance over the Indian eCommerce spectrum between the two top-honchos – Walmart acquired Flipkart and Amazon is still on and raging. Herein, to keep up in the fastest growing economy, Flipkart needs to spend heavily to keep a fine lead over Amazon, given the high-stakes market.
To maintain their individual game stratagem strong, both Flipkart and Amazon are all decked up to spend several billion of dollars over upcoming years in India. The quest to dominate the fastest economic spectrum in India, strategies will be implemented that can make Indian consumers go all dollar-eyed! That being said, even Amazon has been pretty much vigilant about its game plan. Since India accounts for a major part in its global ambitions, the slowdown in its sales can be attributed to a late Diwali celebration that hampered the September quarter.