Most leading online marketplaces are clocking steady growth – in their losses. India’s popular etailing company Snapdeal has filed reports with the Registrar of Companies (RoC), and its losses have grown by 125%. Its losses for the year FY2015-16 stood at Rs 2,960 crore. Thankfully the revenue has increased by 56% at Rs 1,456.6 crore.
Freecharge (the company’s subsidiary that enables mobile recharges), has also recorded a loss of Rs. 235 crores and income of Rs. 36 crores. Snapdeal’s logistics arms Vulcan has a loss of Rs. 20 crores, and GoJavas’ loss stands at Rs. Rs 70 crores.
The company spent a good chunk of money on a rebranding that it undertook in September 2016. The company spent approximately Rs. 200 crores towards an image makeover just ahead of the annual festive sales. The company says that it spent for its customers. In a statement, Snapdeal said,
“In order to deliver the best in class customer experience and to set up the necessary infrastructure for future growth, there was an increase in fulfilment and overhead expenses.”
It spent Rs. 911.1 crores on its employees. The company said,
“In FY2015-16, we invested our capital in building our capabilities across technology, logistics and seller ecosystem to support the long-term growth of our business.”
Investor Softbank has written off investments worth $550 million of which a major portion is in Snapdeal and Ola.
“Jason is a strong business leader and entrepreneur who has already been the CEO of two successful companies.”
Everyone has been reporting losses this year, including Flipkart and Amazon. Many companies have been announcing that they will break even soon, and turn profitable in the next few years. If the rate of losses is going to follow the current trend, profits will be a distant dream.