India’s biggest ecommerce platform Flipkart ran up a daily loss of Rs 14 Cr. in the last financial year, reported ET.
Based out of Bangalore, the ecommerce platform predominantly spent on customer acquisition which led to the increase in revenue loss. Besides, the higher cost of retaining talent, including salaries and stock-based compensation that shot up by 124% to Rs 1,880 Cr. as well as business promotion expenses that doubled to about Rs 1,100 Cr., drove a large part of the losses.
However, the online retailer was successful in increasing the revenue to Rs 15,403 crore in fiscal 2016. The company said that it has cut down losses since the beginning of the current financial year and is back on a growth track.
“We will be getting into fiscal year 2018 with a growth tailwind,” said Binny Bansal, Flipkart CEO. He further added, “By March 2017, the company will have cut burn rate by 50%.”
Flipkart’s revenues are categorised in two parts. The retail business – which showed an increase of 42% to Rs 13,706 Cr., and the service revenues (including the commission from third-party sellers); which increased faster by 158% to Rs 1,697 Cr. when the company expanded its business throughout the last year.
As per a Google-AT Kearney study, India’s online industry is expected to be worth $60 Bn by 2020, and will be dominated by three large digital marketplaces – Flipkart, Amazon and the Softbank backed Snapdeal.
Flipkart’s biggest rival and Jeff Bezos-led Amazon also posted losses of Rs 3,571 Cr., as per the regulatory filings by its main India unit – Amazon Seller Services – in fiscal 2016.