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Amazon India incurs losses worth Rs 1,724 crores

By Sujata Sachdeva

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At one end Amazon is the most visited site in India and on the other, it is incurring losses. Its net loss for India business was Rs 1,724 crores in the year ended March 2015. As per the filing with Registrar of Companies (RoC), Amazon Seller Services has registered a six-fold increase from Rs 169 crores a year earlier to Rs 1,022 crores in 2014-15. With Flipkart and Snapdeal, the loss of the three big Indian e-commerce sites now stands at Rs 5,052 crores.

The losses are a result of the expenses on employees, marketing and promotion. For example, Amazon’s bulk costs involved higher advertising, sales and promotion which amounted to almost Rs 1,405 crores, which is almost equal to the combined marketing spend of companies like Godrej Consumer, Dabur and Marico. Even its legal expenses were higher than other companies’ – it stood at Rs 221 crores. This was because of issues of tax and counterfeit claims. The massive losses posted by the three leading e-commerce sites are an indicator of how expensive the battle for market share has become.

Amazon India makes its sales by collecting commissions from third-party sellers, providing marketing services to other Amazon-controlled firms, and selling in wholesale Kindle e-book readers and accessories.

Amazon started its marketplace business only in 2013 but its losses have already exceeded those of Snapdeal’s main entity and may not be much behind Flipkart’s reported losses.

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