At Rs 11,754 crore, the combined losses of e-commerce majors Flipkart,
Amazon and Snapdeal is almost equal to the annual budget of the Indian Space
Research Organisation (ISRO). To put things in perspective, if ISRO was given
the same amount, it would be able to launch about 24 'Mangalyaan' missions to
Mars.
With the battle intensifying between the top three players in the Indian
e-commerce arena, the losses are mounting at an alarming pace. Despite last
year's talks of a course correction by analysts, fuelled by falling investor
sentiment, the losses of the Big Three of the Indian ecommerce sector more than
doubled in the fiscal year 2015-16.
"Only two sets of people are winning this ecommerce
battle. First are the delivery companies and the second, digital marketing
companies like Google and Facebook. As the saying goes, in the gold rush the
only people who make money are the pickaxe sellers," says the founder and
an expert commentator of a leading consultancy who did not wish to be
named.
Snapdeal recently posted a loss of Rs 2,960 crore (2015-16). Add this to Flipkart's Rs 5,223 crore and Amazon's Rs 3,571 crore, you get a colossal loss of Rs 11,754 crore.
Compare this to last year, when the combined loss sheet
of the three companies totaled Rs 6,031 crore (Amazon: Rs 1,724 crore,
Flipkart: Rs 2,979 crore, Snapdeal: Rs 1,328 crore).
While the three players have all claimed to have invested
in developing capabilities to sell more to customers at a faster rate,
estimates suggest that advertising, discounts and salaries formed a bigger part
of the spend. In other words, most of the money of the Big Three went down in
duelling each other.
"The e-retail industry in India has tripled this
year, even though the losses have increased. There is definitely buoyancy in
this space. It is just that because it is a highly competitive space, these
companies are spending a lot on customer acquisition, and that explains the
loss," explains Girish Shivani, director, YourNest.
However, more than customer acquisition the game seems to
have become about customer retention. With Amazon's entry in India in mid-June
2013 the party ended prematurely for home-grown companies like Flipkart and
Snapdeal. The global giant has quickly amassed a good share of the growing
Indian ecommerce market - mostly at the expense of Snapdeal.
"There is no place for five to six companies with the same model to exist
in India. They are all slugging it out by giving greater discounts, which is
only resulting in making bigger losses for them. Amazon has got deep pockets
and Indian companies like Flipkart and Snapdeal need to depend on other
strategies to fight it," says Mohandas Pai, Chairman, Manipal Global
Education Services and Aarin Capita, when asked about the mounting losses of
the e-commerce players.
Source :- India Times
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