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Business
21 Jan 2017

E-commerce sector losses could remonetize economy

Flipkart, Snapdeal, Amazon's mind boggling losses

E-commerce sector biggies like Flipkart, Snapdeal and Amazon have cumulatively reported an increase of 51% of total losses amounting to Rs.11,754 crore.

The quantum of e-commerce's losses is so humongous that cumulatively it could have funded the government's cost to print new notes to remonetize economy.

According to available data, printing of new notes will cost the RBI little over Rs.12,000 crore.

In context

Flipkart, Snapdeal, Amazon's mind boggling losses

E-commerce losses twice ISRO's budget!

Combined losses of Rs.11,754 crore are roughly twice the budget of the Indian Space Research Organization (ISRO). For the same amount of money, ISRO could have launched 24 'Mangalyaan' missions to Mars.

Heading towards bleaker times?

What Transpired

Heading towards bleaker times?

E-commerce companies are likely looking at an impending crisis.

In a little more than a year, Flipkart's valuation has plummeted by two-thirds from its peak valuation and is currently now valued at $5.5 billion.

Amazon has also declared losses of roughly Rs.3500 crore and Snapdeal is on the verge of pivoting their business model to strengthen their position in the market.

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E-commerce's losses could train 1 crore people!

E-commerce sector's losses could fund the government's allocation to Pradhan Mantri Kaushal Vikas Yojana: roughly Rs.12,000 crore can impart skills to acquire employment to nearly 1 crore people for a period of four years!

Revenues

Falling valuations exacerbated post demonetization

Falling valuations in the e-commerce sector are indicative of an ineffective business model.

Investors who were hoping for impressive returns in 2016 were deeply disappointed.

Demonetization has severely impacted funding for start-ups in India: many are struggling to survive and may even shut down in coming months.

As for the e-commerce sector, experts say losses are set to increase further in 2016-2017.

Overall losses up by 293%

Top 22 online start-ups in India have seen losses soar by 293 per cent for the financial year ended 2015-2016: this was across sector such as Real Estate, food tech, e-commerce and medical technology.

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