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Amazon Suffered Heavy Loss In India

27 Jan

Amazon India, Amazon loss

The American online trading giant has suffered from a heavy loss of Rs 17.24 bn  in India last year

The net loss of the American E-commerce company business in India, increased to $250 million in the year ending in March last year, which took the three online trading giants’ combined losses to $740 million. Others include Snapdeal and Flipkart. The losses have been made as the organizations tried to lure buyers by providing deep discounts.

The Seattle based company has filed to the Registrar of companies that Amazon Seller Services(ASS) succeeded in registering a 600% rise in sales from $20 million to $150 million an year earlier. The organization earns its income from advertisement revenue, seller commissions and sales of online reader kindle on its platform. In 2014, the online retailer made a net loss worth $50 million.

While the 3 companies moved ahead to dominate a major portion of the Indian market, their profitability was hit. Expenses on promotions, marketing and workers have led to such huge losses. The 2 main companies controlled by the biggest E-commerce company of India FlipKart, reported a loss of around $290 million in the year ending March which is much more than $110 million worth loss made in the year before.

Jasper Infotech, which runs electronic commerce marketplace Snapdeal.com, recorded $200 million worth loss for the year ending in March. The spokesperson of Amazon India stated its platform was India’s most visited online trading site and was having the fastest-growing buying application amongst all E-commerce enterprises in the last year.

Amazon stated last week through a rights issue it would be injecting $250 million into ASS, turning it into the largest injection of capital since its entrance in the second most populated country in 2013. With this investment, the company would have invested around $70 million in the entity in 2015.

The Indian division of the largest E-commerce marketplace made an addition of at least 40,000 goods per day in 2015. Almost 90% of the company’s sellers employ its warehousing and logistics services. The US organization hopes that India would overtake United Kingdom, Germany and Japan to turn into its biggest market abroad, besides turning into the fastest one to take its gross merchandise value to $10bn, official Diego Piacentini spoke to Economic Times in October.

As per reports of ET in July, the online retailer might be investing around $5 billion in the emerging economy, up from $2bn promised previously by founder and CEO Jeff Bezos. A report by Credit Suisse has revealed that whereas there is a sizeable market opportunity, most electronic commerce segments are having competitive dynamics and the existing strategy looks to be building a moat around themselves by growing up and becoming larger than rivals and in the procedure, making huge losses.

 

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Posted by on January 27, 2016 in Amazon, Technology

 

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