Flipkart had recently opened up its B2B marketplace Flipkart Wholesale to MSMEs and small scale Kirana stores as the company looks forward to scale up and gain access to a larger consumer base across India.
The B2B arm of the Indian e-commerce giant did steady business during the financial year 2019-2020. It sold goods worth Rs 34,170.5 crore in FY20, up by 11.8% as compared to sales of Rs 30,571.2 crore it achieved during FY19
The company recorded another Rs 439.6 crore in non-operating income, which includes interest and gain from financial instruments. Such collections grew by 20.86% as compared to Rs 363.7 core earned in FY19.
The primary revenue of the B2B arm comes from the sale of goods to other e-tailers who in turn sell these goods on Flipkart’s online marketplace.
Naturally, the purchase of said merchandise stood out as the biggest cost factor for the company accounting for 99.67% of the total expenses incurred during the last fiscal. Such purchases grew by 9.4% to Rs 37,636.7 crore in FY20 from Rs 34,396.8 crore in FY19.
The company held inventories worth Rs 2,963.6 crore at the end of March 2020 selling goods at an inventory turnover of 12.62X. On average, it managed to replace the stock in less than a month during FY20.
Further, rent and warehousing costs went up by 33.2% to Rs 158.5 crore during FY20 from Rs 119 crore spent in FY19 as the company accommodated for increased scale of operations. It spent 25.5% more on employee-related costs as well which increased from Rs 246.2 crore in FY19 to Rs 309 crore during FY20.
Advertisement and promotions expenditure were mostly handled by Flipkart Wholesale’s holding entity and the B2B arms spent Rs 13.8 crore on such expenses, down by 27% from nearly Rs 19 crore spent in FY19.
Another Rs 55.1 crore was recorded as miscellaneous expenses, pushing the total expenditure incurred by the company in FY20 to Rs 37,760.4 crore. It recorded an 8.6% increase from Rs 34,770.2 crore in FY19.
The company spent Rs 1.1 to earn a single rupee of operating revenue and its net cash outflow from operations went down by 17.6% to Rs 3,125.6 crore in FY20 from outflows of Rs 3,791.9 crore in FY19.
During the pre-covid period of 2019-2020, Flipkart Wholesale achieved steady growth while working on operational efficiency and it reflects in the company’s annual results.
Loss during FY20 went down by 22.3% to Rs 3,150.3 crore from Rs 3,853.3 crore in FY19 while EBITDA margin has improved by 320 BPS to -8.9% in FY20 as compared to -12.1% in the previous fiscal.