Jasper Infotech Pvt Ltd-led Snapdeal’s loss, has reportedly, more than doubled to Rs 2,960 crore in the year ending March 2016 from the Rs 1,328 crore for the year ending March 2015, according to numbers filed with the Registrar of Companies. It posted around 125 per cent rise in its losses against a 56 per cent rise in its revenues for FY16, according to media reports.
The revenue of the e-commerce major rose to Rs 1,457 crore from Rs 933 crore during the same period in the previous financial year.
Last year Snapdeal had been trying to regain market share after it slipped to third spot with Amazon India entering the market and heating up competition in the online retail space. Snapdeal repositioned its brand and was taking efforts to improve its customer service levels. It also reported to cut costs and revealed that it had set its sight on profitability rather than market share. It also went for a brand overhaul (which included launch of a new logo and television campaign) and spent close to Rs 200 crore in advertising and marketing in September and October–the most profitable season for e-commerce sales. During the 2015 festive season, it sold 11million units.
Snapdeal has tried to tweak its business model and focus on services, too. The company integrated services of platforms such as Zomato, Cleartrip, Urban Clap and redBus a year ago to help consumers book bus tickets, flight tickets, hotel tickets and food directly. This move was to help Snapdeal earn commissions for each booking made on the platform.
Currently, Japan’s Softbank Group has the largest shareholding of close to 33 per cent in the six-year old company. Other top investors include Kalaari Capital, Nexus Venture Partners, eBay Inc., Foxconn Technology Group and Alibaba Group Holding Ltd. Co-founders Kunal Bahl and Rohit Bansal collectively hold less than a 6.5 per cent stake in the company, which was valued at $6.5 billion last year.
Meanwhile, Flipkart recorded Rs 5,233 crore in loss for last year, leading the loss tally, followed by Amazon at Rs 3,571 crore at the second spot. The mounting losses for e-commerce firms are speculated to be on the back of heavy marketing spends. Overall losses culminated to Rs 11,754 crore in the last fiscal year.
It’s said that the online retail market is set to show little or no growth as it amounted to just $14-14.5 billion in 2016 compared to $14 billion spent on online shopping, according to media reports. With this growth rate, the estimates of a $60-100 billion Indian e-commerce market look doubtful by 2020.