Flipkart reduces its loss by half; investor Tiger Global takes charge

The logo of India's largest online marketplace Flipkart is seen on a building in Bengaluru (Photo: Reuters)
Flipkart Internet, the marketplace arm of India’s largest e-commerce firm, has reduced its losses to Rs 1,296 crore in the nine months to December in a year when its largest investor Tiger Global took charge and focused on belt-tightening. Revenues for the nine-month period stood at Rs 1,476 crore.

Flipkart’s logistics arm Instakart Services or Ekart Logistics, however, saw losses pile up to Rs 1,134 crore over the same period as it offered lower rates to vendors to deliver packages on its platform. Ekart Logistics revenues for the nine-month period stood at Rs 474 crore.

Flipkart Internet and Ekart Logistics had reported losses of Rs 2,305 crore and Rs 811 crore, respectively, in 2015-16. Flipkart Internet’s narrowing losses accompany reduced advertising and business promotion expenses, which stood at Rs 565 crore in April-December 2016-17, sharply lower than the Rs 923 crore it spent under this head in all of 2015-16.

“Our fashion and electronics categories are doing really well. Flipkart has more than 1 crore of what we call permanent buyers, who spend at least once on big-ticket items such as televisions or other home appliances every year, as well as customers who come to the portal every year to buy phones,” said a Flipkart executive who did not wish to be named. 

“Most of our flash sales were sold out within seconds. This has helped us cut losses,” the person added.

The nine-month numbers of Flipkart Internet and Ekart Logistics were internal and unaudited, a person familiar with the development said. A Flipkart spokesperson declined to comment on the issue.

Since last year, Flipkart, which commanded a valuation of $15.2 billion, is paring costs, edging out high-cost employees and reducing discounts to customers, as it attempts tries to fend off competition from rival Amazon. 

During the festive season that began in September, Flipkart clocked higher sales than Amazon, with the high-margin fashion business taking prominence. Flipkart dominates India’s fashion e-commerce with 70 per cent market share split among itself and units Jabong and Myntra.

According data platform Tofler, Flipkart India and Flipkart Internet together earned roughly Rs 15,129 crore ($2.2 billion) in 2015-16, up from Rs 10,390 crore in 2014-15. Losses for the two companies mounted to Rs 2,850 crore from Rs 2,000 crore a year earlier.

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