Data accessed by TOI from Hong Kong Stock Exchange showed that Snapdeal's loss rose from around Rs 270 crore in March 2014 to nearly Rs 1,350 crore in March 2015 as the company shelled out $25 million (over 150 crore) a month as discounts and marketing expenses. Snapdeal may not be an isolated case. The situation, industry experts say, is similar across e-commerce segment, and is not confined to India alone. For instance, Amazon emerged as the world's largest e-tailer recently and has been commanding a hefty premium even on stock markets, despite reporting a surprise profit last month after several quarters of losses.
Other top e-tailers in India are also going through similar situation as Amazon in India clocked a net loss of about Rs 320 crore after its first year of operation (2013-14), while Flipkart reported a loss of Rs 400 crore in FY-14, according to filings with Registrar of Companies (RoC). The latest numbers for FY15 are not available yet with RoC.
The Rs 1,350 crore loss incurred by Snapdeal alone in 2014-15 is striking as the top three players - Flipkart, Amazon and Snapdeal put together had suffered a loss of around Rs 1000 in 2013-14. However, Flipkart's valuation has shot up to $15 billion as it commands the largest market share in India. But, Flipkart too is burning about $40 million per month in measures such as discounts, marketing and customer acquisition, with eyes on touching GMV (gross merchandise value - an industry jargon to a measure value of goods sold on the online marketplace) of $8 billion by the year-end.
Snapdeal, which closed at $3.5 billion of GMV last month, is aiming to topple Flipkart with a $9-10 billion target by the same time.
"There is continuing interest in Indian e-commerce but investors now are also asking companies to start looking at profits or at-least look at reduction of losses but the scenario is opposite. Coming months would be more crucial in terms of how they perform because Reliance and Tata are preparing to disrupt the market," Arvind Singhal of Technopack, a consultancy firm, said.
According to industry experts, investors so far have not bothered much about profits but the real numbers of these companies are being screened. This has been a key reason why Snapdeal's latest fund-raise dragged over months and had to settle down at a valuation of $4.7 billion instead of $7 billion, sources said.
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