Amid mounting losses, e-tailers giving discounts worth Rs 2,600 crore
Amazon reported a fourteen-fold growth in traffic during the first day of the Great Indian Festival on Thursday
Moneycontrol News
All good things come at a cost, and the eye-popping discounts offered during the ongoing four-day online shopping bonanza that ends today is expected to set e-commerce companies back by a whopping Rs 2,660 crore, an article in the Economic Times today said, quoting a RedSeer Consulting report.
The festive offers led by Amazon, Flipkart and Paytm are seeing discounts up to 90 percent on some products. This, no doubt, is a windfall for online shoppers but it is burning the money for the e-tailers.
However, the urge to splurge comes from the huge funding they have received recently. Paytm, in May, received USD 1.4 billion from SoftBank. Whereas in August, the e-commerce giant Flipkart raised USD 2.5 billion from SoftBank’s USD 100 billion Vision Fund. Amazon, on the other hand, pumped in USD 2.6 million into its Indian arm.
Flush with money, e-commerce companies are not looking for profits. The focus is on attracting costumers. However, losses are mounting for these big players.
For instance, Amazon India reported a loss of Rs 3,572 crore in the FY16. Flipkart’s loss soared to Rs 3,572 crore and Paytm reported a loss of Rs 1,549 crore.
Despite these numbers, the ploy has played out well for the companies. Amazon reported a fourteen-fold growth in traffic during the first day of the Great Indian Festival on Thursday. ShopClues claims to have seen a jump of 19 percent in the number of users.
