When the world e-commerce giant Amazon launched its service in India in 2013, it was observed that the company was in no hurry to catch-up on Flipkart.
Amazon was pumping in millions of dollars even then but with a balanced approach. Instead of showering capital only on discount, the e-commerce leader was building infrastructure, including warehouse and transportation service in the country.
Now, the investments made years ago are turning out to be growth drivers for the business.
The logistic arm of the platform, Amazon Transportation Services saw its revenue risen to Rs 996 crore in fiscal year 2016-17, said an ET report. The transportation business had clocked a revenue of Rs 621 crore in FY16.
With the growth in revenue, the losses for the entity has also increased to Rs 16 crore from Rs 9 crore. The entity saw a significant increase in delivery expenses to Rs 594 crore from Rs 327 crore.
Experts, however, ward off the rise in delivery expense as it is only the part of the company’s growth. As the e-commerce sales grew in India so does the shipping costs.
In comparison, its rival in India Flipkart successfully lowered its transportation costs.
During FY17, Amazon has witnessed a sharp increase in losses and some small profits.
Amazon Seller Services, the India unit of Amazon, saw its losses widening to Rs 4,830.6 crore for 2016-17 fiscal from the previous year,
Besides, Amazon Wholesale India, which has been aggressively investing into its B2B business in the Indian market, reported a net profit of Rs 2.8 crore in the financial year 2016-2017.
After tasting profit for the very first time on Indian shore through its wholesale business arm, the largest seller on Amazon India platform, Cloudtail posted a net profit (before tax) of Rs 1.59 crore in FY17.