NewsBytes
    Hindi Tamil Telugu
    More
    In the news
    Narendra Modi
    Amit Shah
    Box Office Collection
    Bharatiya Janata Party (BJP)
    OTT releases
    Hindi Tamil Telugu
    NewsBytes
    User Placeholder

    Hi,

    Logout


    India Business World Politics Sports Technology Entertainment Auto Lifestyle Inspirational Career Bengaluru Delhi Mumbai Visual Stories Find Cricket Statistics Phones Reviews Fitness Bands Reviews Speakers Reviews

    Download Android App

    Follow us on
    • Facebook
    • Twitter
    • Linkedin
     
    Home / News / Business News / Will Indian e-commerce giants show profit anytime soon?
    Will Indian e-commerce giants show profit anytime soon?
    1/10
    Business 4 min read

    Will Indian e-commerce giants show profit anytime soon?

    By Anish Chakraborty
    Mar 23, 2017
    11:01 am
    Will Indian e-commerce giants show profit anytime soon?

    Currently, there are three major players in the Indian ecommerce space - Flipkart, Paytm and Snapdeal. Recent analysis based on the fiscal results of 41 Internet start-ups/companies shows that Flipkart has incurred a loss of Rs. 5,769crore, Snapdeal has Rs. 3,316crore in the red and although Paytm is a new player in the market, it has already run into a loss of Rs. 1,534crore.

    2/10

    What's eating up the profit?

    The money spend to fulfill a order is higher than the profit margin. Good logistics support unless developed in-house is a big liability. The young crowd may shop online, but the major buying pattern remains traditional. Acquisition cost is high as the firms need to offer massive discounts to attract consumers. The online market is still nascent in nature and is erratic in behaviour.

    3/10

    Is there a beacon of hope?

    Around half the population of India is in the 20-29 age bracket, a surge in demand may happen in the coming years. There are less traditional costs like acquiring real estate for physical presence. There is an infinite possibility of scaling-up if proper mechanism is in place. A wider inventory offers more options than what is available at a traditional store.

    4/10

    How to survive till you show profit?

    Instead of aping foreign models, Indian e-commerce players need to read into the mindset of the consumers to gauge their demand. They need to invest in proper brand recall and understand the needs of a consumer base that has limited spending capabilities. Additionally, they should channel resources to push services further down the economy rather than a particular section of consumers.

    5/10

    The Chinese dragon at the door

    There have been rumours of Alibaba making its proper entry very soon and also of a merger between Alibaba backed Paytm and SoftBank backed Snapdeal. Alibaba sees profit through money it gets from ads and add-on services it provides to the sellers on its platform. However, in India platforms make money based on a cut they get from the sellers on every product sold.

    6/10

    China vs India: the war of markets

    India is one of the biggest markets in Asia but it still runs second to China. China sees a lot of products having a immediate release, whereas in India you still have to scour International websites to get your hands on the latest tech-products. Alibaba enjoys monopoly in China but here there is competition from local as well as foreign entities.

    7/10

    How Amazon is balancing the scales

    Amazon is bleeding money from its e-commerce platform but that is being bandaged by the cloud computing arm which has generated a massive $3.53 billion in the fourth quarter of 2016 cushioning the fall and making the firm capable of showing a profit.

    8/10

    The ugly side of the spectrum

    According to YourStory estimates, things are not going to look up unless GMV per transaction reaches to Rs. 5,000 from the now GMV of Rs. 1,750. YourStory noted that at present, burn per transaction is around Rs. 845 which is five times more than their net income of Rs. 175 and it will persist unless customers can't be coaxed into buying more online products.

    9/10

    After all, it's an online game

    According to statistics, in China, 71% make use of the Internet or have a smartphone, whereas, in India only 21% have access to smartphones or Internet. Even in basics there is a stark difference, 98% of Chinese own a phone compared to 72% in India.

    10/10

    The numbers keep piling up

    Currently the e-commerce platform has to shell out Rs. 150 for logistics cost and marketing cost over every potential avenue of revenue. This is coupled with the recurring costs of maintaining staff cost and also keeping the inventory fully functional. Although, mobile and electronics sell most, the profit margin is just 3.5% whereas books give margin of 10% but is the lowest selling product.

    Facebook
    Whatsapp
    Twitter
    Linkedin
    Related News
    Flipkart
    Alibaba Group
    Snapdeal
    Amazon

    Flipkart

    New CFO-backed Flipkart returns to the game India
    E-commerce sellers will pay 2% tax at source in GST Tata Consultancy Services (TCS)
    E-commerce sector losses could remonetize economy Snapdeal
    2016 Year in Review for Indian unicorns Morgan Stanley

    Alibaba Group

    Snapdeal denies reports of Alibaba's acquisition interest Kunal Bahl
    Alibaba's Singles' Day clocks over $5 billion in one hour Jack Ma
    Jet.com to be acquired by Walmart for $3bn in cash Walmart
    BigBasket eyes $200 million investment from Paytm Mall, Alibaba Paytm

    Snapdeal

    Snapdeal makes strategic shift with wholesale entity Kunal Bahl
    Ola to shut down TaxiForSure; lays off several employees India
    Merging talks explored by Snapdeal, Flipkart, Amazon Manish Malhotra
    Flipkart's mergers if okayed, starts the proper e-commerce war Flipkart

    Amazon

    UK gets shipment of controversial Peruvian gas Shell
    CES 2017 goes off to a good start Ram (Random Access Memory)
    Amazon: Not rattled by Flipkart, Ola protectionist call India
    Amazon launches Prime Video service in India India
    Next News Article

    Love Business News?

    Subscribe to stay updated.

    Business Thumbnail
    Indian Premier League (IPL) Celebrity Hollywood Bollywood UEFA Champions League Tennis Football Smartphones Cryptocurrency Upcoming Movies Premier League Cricket News Latest automobiles Latest Cars Upcoming Cars Latest Bikes Upcoming Tablets
    About Us Privacy Policy Terms & Conditions Contact Us Ethical Conduct Grievance Redressal News News Archive Topics Archive Download DevBytes Find Cricket Statistics
    Follow us on
    Facebook Twitter Linkedin
    All rights reserved © NewsBytes 2023