Increased investments crank up losses for Amazon, but company confident of growth

US based marketplace Amazon has witnessed a growth in its losses. Based on a filing with the Registrar of Companies (RoC), the company has recorded a loss of Rs. 3,572 crores (from Rs. 1,724 crores last year). Thankfully, its income has also gone up from the figures of 2015. Its revenue stands at Rs. 2,275 crores (from Rs. Rs 1,022 crores).

Amazon Seller Services, the service wing of the company, has also notched up losses to the tune of Rs. 300 crores per month. Its revenue went up to Rs. 2,275 crores.

Its main nemesis in India, Flipkart, has recorded a revenue of Rs. 1,952 crores, and a loss of Rs. 2,306 crores for the year ended 2016.

Courtesy: Livemint

Increased losses due to investments this year

Amazon has pumped in sufficient funds to its India operations this year. It put in Rs. 160 crores into its wholesale business, Amazon Wholesale, and Rs. 2010 crores into the retail wing.

In the filing, Amazon said,

“The company has invested in establishing infrastructure, opening new fulfilment centres and technology advancement due to which the company’s losses increased to Rs3,572 crores.” It has more plans ahead, “The company is also investing on launching new products and new services for its customer and its sellers. The company is confident on its future growth.”

Taking the offline route

In a twist in the tale, Amazon is considering clearing its stock through its physical store partners. The company has requested its sellers with stores to sell Amazon exclusive smartphones through their stores.

This is a safe route for the company, feels the head of a cell phone chain, citing anonymity,

“Amazon has plans to invest significantly to expand its offline distribution. For the online-exclusive brands, it’s a winning proposition since they don’t have to spend much money on creating infrastructure for warehousing and offline distribution and yet get immediate sales.”

Not everyone is keen on this. According to another anonymous seller,

“Several online-exclusive brands do not have extensive service network, which could become an issue considering the fact that consumers would come back to us if they do not receive proper service support.”

Will 2017 bring fewer losses, more revenue and a hint of profits for Amazon? The company is definitely taking the necessary measures for it.