Flipkart leads loss tally in 2016 followed by Amazon, Snapdeal

Moneycontrol Bureau

E-commerce firm Snapdeal which is run by Delhi-based Jasper Infotech has more than doubled its losses to Rs 2,960 crore during the financial year ending March 31, as per a report by The Economic Times.

Rival Flipkart topped the losses tally for last year with Rs 5,223 crore in losses, Amazon came second with 3,571 crore in losses. The mounting losses for e-commerce firms indicating heavy spends on marketing to up the gross merchandise value (GMV) last year.

Snapdeal had reported a loss of Rs 1,328 crore during the previous financial year. The revenue of the e-commerce major, rose to Rs 1,457 crore from Rs 933 crore during the same period of the previous financial year.

However, when combined with Freecharge's losses amount to Rs 3,316 crore.  E-wallet Freecharge was acquired by Snapdeal in April, 2015.

Snapdeal has been struggling to compete in the e-commerce market with home grown rival Flipkart and US-based Amazon.

During the festival sales that took place around Diwali last year, the Softbank funded company came a distant third as compared to the two firms in terms of number of units sold. While Snapdeal sold 11 million units during the five day sale period, Amazon sold 15 million units, while Flipkart reported a sale of 15.5 million units.

This happened even as Snapdeal went through a massive brand restructuring and marketing exercise in September. It introduced a new logo and tagline. It also announced an investment of Rs 200 crore on 360 degree marketing campaign around the festive campaign.

Comment

All large e-commerce companies in India including Snapdeal, Amazon, Shopclues, Paytm and Flipkart reported huge losses last year. In a scenario, where late stage funding has dried up in India even as sales have dipped due to demonetisation, companies will find hard in 2017 to keep up with the marketing spends of last year.

Expect a cut in marketing budgets, layoffs and potential consolidation in the first half of 2017 between the top five e-commerce players. The entry of Alibaba into India will further complicate matters. Follow @startup_18