Amazon India's losses widens to 1,724 crore this year from a net loss of 321 crore last year

Amazon Inc's net loss for its India business widened to Rs 1,724 crore in the year ended March 2015, taking the combined losses of the 'Big 3' online firms including Flipkart and Snapdeal to Rs 5,052 crore as they hunted for buyers by offering deep discounts.

Amazon Seller Services registered a six-fold increase in sales to Rs 1,022 crore in 2014-15 from Rs 169 crore a year earlier, according to a filing with the Registrar of Companies on Saturday. The company earns income from seller commissions, advertisement revenue and sales of its Kindle e-reader on its portal. A year ago, it had a net loss of Rs 321 crore.

While the three firms raced ahead to control majority of the market, profitability took a hit. This was due to expenses on employees, marketing and promotions.

The two main entities controlled by Flipkart, India's largest ecommerce firm, reported a loss of about Rs 2,000 crore in the year ended March compared with a loss of Rs 715 crore in the previous year.

Jasper Infotech, which runs ecommerce marketplace Snapdeal.com, reported a loss of Rs 1,328 crore for the year ended March.

Amazon India's spokesperson said its portal was the most-visited commerce site in the country and also had the fastest-growing shopping app among all ecommerce companies in 2015.

"At the end of Q3-2015, we saw an approximately 500% Y-O-Y growth in volume, and in Q4-2015 we sold more than we did in all of 2014. We are committed to investing aggressively We are committed to investing aggressively with a long-term horizon and transforming the way India buys and sells," the spokesperson added.

The company said last week it will inject Rs 1,696 crore through a rights issue into Amazon Seller Services, making it the biggest infusion of capital since entering the country three years ago. With this investment, Amazon would have pumped in about Rs 4,800 crore into the entity in the past year.

The Indian unit of the world's largest consumer marketplace added products at the rate of 40,000 a day last year and 90% of its sellers use its logistics and warehousing services.

But, a bulk of Amazon's expenses was due to higher advertising, sales and promotion costs of almost Rs 1,405 crore, almost equivalent to the combined marketing spends of Godrej Consumer, Dabur and Marico.

Amazon India's legal expenses, too, were substantially higher than most companies at Rs 221crore as it faced tax issues and counterfeit claims.

Image credit: Indiatimes