The last financial year wasn’t great for home-grown etailer Flipkart. According to the regulatory filings for FY 2015-16, the marketplace division of the firm – Flipkart Internet Pvt. Ltd reported a loss of Rs. 2,306 crore. The etailer’s losses more than doubled as FY 14-15’s losses were Rs. 1,096 crore.
The online marketplace’s revenue increased by 153% as it climbed up from Rs 772.5 crore in FY 14-15 to Rs 1,952 crore in FY 15-16.
Would it affect Flipkart’s chances to raise funds?
After scouring the pool of potential investors, investment banks are going to help the ecommerce leader to raise funds. It is quite possible that the discouraging financial report card of the last fiscal year would make it difficult for the etailer to raise desired funds. In addition, there were reports about Flipkart’s inconsistent financial figures because of which the Walmart investment deal failed.
Is competition with each other killing Amazon, Flipkart?
Industry experts believe that Flipkart’s losses increased as it generously spent on strategies to compete with rival Amazon. The American etailer’s $3 billion investment increased pressure on rivals Flipkart and Snapdeal. This could be the reason why the Bansals splurged on ramping up technology and logistics, even when the losses doubled.
Last week IOS reported how Amazon’s losses for FY 16-17 would touch 1 billon. And Amazon India’s high cash-burn rate is said to be the main reason behind the predicted heavy losses.
Both the ecommerce biggies’ losses are piling up due to this stiff competition. The big question is would it benefit any of the two in the end? Or would some other ecommerce player benefit from this rivalry?