The e-commerce giant Flipkart, which targets gross merchandise value (GMV) growth in retail space (B2C), is adopting a completely different strategy in wholesale business. Flipkart India, the wholesale business of the e-commerce platform, is inching towards the business growth in consonance with unit-economics.
Flipkart India witnessed revenue rising 18 per cent to $2.3 billion (Rs 15,569.2 crore) in FY17 from $1.9 billion (Rs 13,177.4 crore) compared to the previous year. Besides, the company’s losses fell to $36.3 million (Rs 244.7 crore) in FY17 from $80 million (Rs 544.5 crore) in the previous year, a 55 per cent decrease in losses, according to regulatory filings.
The wholesale arm of the e-commerce platform has been able to reduce the losses by cutting employee benefits expense. The employee benefit expense was reduced to 166.6 crore during 2016-17 fiscal compared to $36 million (Rs 245.4 crore) during 2015-16, revealed the documents filed with Ministry of Corporate Affairs.
Importantly, Flipkart’s rival Amazon had recorded a whopping 2,700X leap in revenue during FY17. The Jeff Bezos-led company had posted a total turnover of $1.04 billion (Rs 7,047 crore) from a mere $380K (Rs 2.63) in FY16.
To ramp up its B2B arm, Flipkart injected around Rs 4,472 crore into its wholesale arm in February this year. The funding was aimed to take on Amazon and Alibaba in the wholesale business.
This was the third and the single largest investment, which was made in February, into a Flipkart unit.
Amazon Wholesale primarily acts as a distributor to 15,000 vendors selling across categories including groceries and electronics. This strategy devised by the company after government capped a single seller not to exceed 25 per cent GMV at any online marketplace.
The wholesale unit majorly supplies smartphone to few merchants who list it on the marketplace. Since smartphones sell like a hotcake, Amazon’s wholesale unit had experienced a crest in terms of revenue.
Amidst this, Flipkart is set to join the bandwagon of retail giant Walmart after $16 billion deal. After the completion of the deal, the e-commerce game will start from a new end in the country when two world behemoths collide head-on.
The development was reported by Mint.