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Five months ago, we reported that Snapdeal, India’s second largest E-commerce platform, reported a five fold increase in loss. The losses accounted for were over $200 million. Those figures have now reached almost Rs. 1328.01 crore (via Mint), pretty much consistent with the previous losses of the company over this financial year.
The company’s loss has grown five-fold in the 12-month period, according to documents filed with the Registrar of Companies. The widening losses were accounted for the year ended 31 March. Losses accounted for the previous year were tallied to be Rs. 264.6 crore. The losses are primarily not because of Snapdeal’s fall in sales, but its over-the-top expenditures to maintain its market share amongst competition like Flipkart and Amazon India.
Earlier this year, Snapdeal had registered an impressive gross merchandise value (GMV) jump of 222%. This jump was increased to four fold in August for the year ended March 2015, according to Snapdeal’s largest investor SoftBank Corp. Estimations had it that the company would reach a GMV of roughly $2 billion in March. This value refers to the cost of the goods sold on a website but does not take into account discounts or even exchanges.
Flipkart, on the other hand, reported a loss of about Rs. 2,000 crore for the year ended 31 March. The previous recorded 12 month loss was set at Rs. 715 crore. The losses for this E-commerce site are accounted for the two main entities controlled by it.
Both Indian E-commerce websites have been heavy in terms of investments. Snapdeal’s value was over $4.8 billion in August, post a $500 million funding round led by Chinese e-commerce firm Alibaba Group, Foxconn Technology Group and existing investor Softbank Group. Flipkart’s evaluation can be held at a steady $15 billion, to put things into perspective.
All three of India’s leading online shopping portals have been aggressive in trying to magnate customers into using their services. May it be advertising (via television, print media or social media) or offering discounts, these platforms do not hold back. We saw a discount battle between Snapdeal and Flipkart a few months ago.