Flipkart India’s expenses for FY18 ballooned to Rs 23,722 crore from Rs 15,813 in FY17, indicating around 50% increase, while the total expenditure of Flipkart Internet ballooned a mere 8.5% to ₹4,219 crore.
Flipkart’s high fight against Amazon has caused the Flipkart India, its wholesale arm and Flipkart Internet, its marketplace arm combined losses of over Rs 3,200 crore for the financial year ended March 2018, 70% higher than FY17, according to regulatory filings with ministry of corporate affairs(MCA).
Flipkart India, the wholesale arm of the online retailer gaint, saw losses swelling to over Rs 2,000 crore, while Flipkart Internet, which earns commissions from marketplace reported losses by nearly 30% of about Rs 1,100 crore than the previous year. Flipkart India’s losses for the FY17 had come down to about Rs 244 crore, compared to Rs 545 crore in the financial year 2016.
The revenue of flipkart India grew by 39% to reach ₹21,600 crore, while loss ballooned to reach ₹2,000 crore. However, Flipkart India have made the improvements by cutting it’s losses by 55% during the FY17, compared to FY16.
According to Flipkart India filing,”The major reason in increase in the net loss is due to employee benefit expenses, finance cost, purchase of traded goods and other miscellaneous expenses”. That is, Rs 166 crore in the previous year to Rs 330 crore in FY18.
Flipkart Singapore, the parent company accounts for about 80-90% of Flipkart India and Flipkart Internet revenue over the last three financial years. It also accounts the revenues and losses of its other arms Myntra, PhonePe, and, logistics unit Ekart.
This rising loss in the latest year is due to Flipkart’s aggressive marketing battle with Amazon India, for the greater market share as to take on its American rival.
With Flipkart now part of offline retail giant Walmart, the competition against Amazon is further expected to intensify, The cash burn is expected to increase and too analysts expects the loss-making trend to continue till 2020. For Walmart, Flipkart is the only e-tailing bet across the globe.
Both online retail rivals just concluded their festive season sale, Flipkart’s ‘Big Billion Days’ and Amazon’s ‘Great Indian Festival‘, offering huge discounts and more cashbacks to customers, further adding to its expenses.
Also, earlier this month, it was reported that both Amazon and Flipkart hired around 80,000 employees just to prepare for their biggest ever festive season sales surge, further adding to their growing expenses.
Both online retail giant recently concluded their annual flagship sales clocking close to $2 billion.