India’s largest online retailer Flipkart had a tough 2017-18 with the two main units of the firm concluding the FY18 with mounting losses even as their combine revenues shot up by 39%.
Flipkart Internet, which runs the e-commerce platform and Flipkart India which is the wholesale unit have reported a 71% increase in combined losses for FY18 at Rs 3,222 crore, up from Rs 1,883 crore in the previous year, according to regulatory filings with the ministry of corporate affairs (MCA). The combined revenues of the two entities stood at Rs 24,717 crore, up 38.6% from Rs 17,822 crore in FY17.
For the year ended March 2018, Flipkart India’s revenue rose 40% to Rs 21,600 crore. Net loss widened eight-fold to Rs 2,000 crore. “The increase in the net loss is due to employee benefit expenses, finance cost, purchase of traded goods and other miscellaneous expenses,” according to Flipkart India filing.
The ballooning of the loss in the latest year is a result of the aggressive marketing and discounting by Flipkart to take on its American rival, Amazon. The competition is set to intensify further as both Amazon and Walmart- backed Flipkart are unlikely to hold back in their battle for market leadership.
Meanwhile, as India is gearing up for its festive season, both Amazon and Flipkart are likely to create about 1,20,000 new temporary jobs to service the anticipated online demand surge. This is twice the number the companies hired last year during this time.
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