Yet another year marks the increase in losses for the online marketplaces. Leading players like Flipkart, Amazon and Snapdeal have managed to hang on. While the companies have had losses, their revenue growth stands taller than the previous year.
However, others have not fared as well. Real estate, food and medical technology have witnessed big losses.
Industry wise break-up – what is draining the resources?
In a report brought out by Kotak Institutional Securities, analysts Kawaljeet Saluja and Garima Mishra observe that most companies (particularly those in real estate) are spending unnecessarily on ads. Companies are also spending heavily on employees, resources, and technology. With the result, even though there are good sales, the losses are steadily climbing.
On the other hand, Zomato and Food Panda, leading players in food, have tried to curb the ballooning losses by cutting costs. They have closed operations in some cities, resulting in employee layoffs. They are choosing to focus on investing in operations.
Jabong and Myntra have already announced their strategy. Myntra plans to focus on its private labels, while Jabong has decided on the opposite. Myntra is also steadily bringing down its discount policy.
“Flipkart seems to have lost market share in FY15, as Amazon and Snapdeal ramped up sales. We believe recent initiatives of Flipkart such as adding sellers aggressively, greater focus on its logistics business and opening it for third-party business, and the introduction of new categories (Flipkart Nearby, second-hand goods) is intended to help it maintain its lead over its peers, as well as add new revenue streams,” said Saluja and Mishra in the report.
Housing.com (which spent on advertising heavily enough to bring down the collective performance of the real estate industry), is working on reducing its advertising and is looking at bringing down its employee count.