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Snapdeal yearly loss escalates five times to Rs 1,350cr

By Sujata Sachdeva

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Snapdeal may have bagged a funding of 500 million dollars (over Rs 3,200 crores) at a valuation of 4-4.5 billion dollars (over Rs 26,000-29,300 crores), but its annual losses escalated five times from Rs 270 crores in March 2014 to around Rs 1,350 crores in March 2015. The main reason behind this is heavy discounting strategies adopted by the company.

Media report suggests that the company spent almost 25 million dollars (over 150 crores) a month on offering discounts and marketing expenses. But Snapdeal is not the only company to have reported such a huge loss; even other leading ecommerce firms are facing the brunt of discounting. Amazon India, for instance, registered a net loss of about Rs 320 crores after its first year of operation (2013-14), while Flipkart reported a loss of Rs 400 crores in FY14, according to filings with Registrar of Companies (RoC).

But Rs 1,350 crores loss reported by Snapdeal alone in 2014/15 is alarming because of the fact that in 2013/14, the top three players - Flipkart, Amazon and Snapdeal put together had suffered a loss of around Rs 1,000 crores. Of late, there has been a slow flow of investments in India’s ecommerce market, touted to be one of the most promising segments, because while ecommerce firms are seeking high valuations, they are not able to book profits due to heavy discounting and failure to retain customers coupled with operational issues.

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