Flipkart, India’s largest e-commerce site is no doubt an industry leader of global e-com marketplace. Holding the clusters of products, sales, heavy discounts, customer loyalty, and reliability, the online store has gained huge popularity in past couple of years. But with a surprising move, the Indian e-com giant has reduced its investment to the marketplace by 70%, which caused the restrained the sale edge during this fiscal year.
This financial year which ended in March has witnessed transformations, improvements, and downfalls of a number of enterprises and Flipkart is one of them. As per the reports, Flipkart in this pecuniary year tightened its cash flow to its marketplace units by 70%, which in other hand created a great impact on its sale volume.
In fiscal 2016, Flipkart Marketplace, a Singapore-based e-com branch got a value imbuement of Rs. 1,629 crore which is quite less than its last year’s performance. In 2015, Flipkart got an infusion of Rs. 5,456 crore which is Rs. 3,827 crore higher than this year’s performance of the company. As demonstrated by Singapore government documents accessed by Economics Times, Flipkart has banked on investments to drive sales growth, primarily using the cash to lure customers with huge discounts.
A senior executive of Flipkart executive while addressing the media said that the company has concentrated its investments in the marketplace units by around 40% this year and decided to invest less than $40 million. As the costs of supply-chain have hiked by 20% and the company is planning some cost effective sale policies for advancing its sale edge.
In comparison to the condensed investment into e-commerce business by Flipkart, the primary India unit Amazon’s which is based in the US – Amazon Seller Services witnessed a significant hike in its market growth. As per the official source, The US-based Amazon Seller Services received high concoction of Rs 7,463 crore in financial 2016, which is Rs 1,888 crore more than its previous year’s infusion. Though both Amazon and Flipkart have entirely relied on investments to drive sales enlargement using the cash discounts to attract the clients, with lower investment units, Flipkart went through serious loss.
It is almost eight years; Flipkart started operating in the e-com market and this not-so-long journey, the company has raised $3.2 billion (around Rs 21,500 crore in Indian currency) and now can perhaps afford to the Capitals needed to reinforce the sale channel. On the other hand, Amazon taking the best advantages of this gap of Flipkart by adding 15-20% growth in recent months has managed to slender this gap. If you consider the total equity investment of both Amazon and Flipkart in the marketplace, Flipkart Marketplaces’ total infusion stands at Rs 7,909 crore, while Amazon Seller Services is holding about Rs 9,600 crore.