Amazon Indian ecosystem in FY22: $5.56 Bn income and $834 Mn loss

It was back in 2012 that Amazon entered the Indian market via price comparison portal Junglee. A  year later it introduced its marketplace platform. Even as they paused Junglee in 2017, since then Amazon has been operating six entities: Amazon Marketplace, Amazon Internet (AWS), Amazon Wholesale, Amazon Data, Amazon Pay and Amazon Retail.

Over the years, these six entities have grown at a rapid clip and cumulatively crossed $5.56 billion (Rs 42,260 crore) in revenue in the fiscal year ending March 2022 (FY22) — marking a growth of 36% over FY21. The consolidated loss of these companies saw a dip of 8% to $834 million (Rs 6,339 crore) during FY22.

To understand the growth of all these companies in FY22, Fintrackr has sifted through their balance sheet in detail. Let’s have a look at the financial numbers of each of these entities below:

Amazon Marketplace scales past Rs 21,000 Cr 

Amazon marketplace’s revenue surged 32% to Rs 21,462 crore in FY22. Services offered to sellers remained the main income driver constituting 87% of the platform’s total scale during the last fiscal year.

Transport and distribution costs are major expenditures which stood at Rs 6,751 crore in FY22. The company also spent Rs 3,426 crore and Rs 3,498 crore on advertisement and legal and professional services respectively. 

Despite a surge in scale, Amazon Marketplace has managed to narrow down losses by 23% to Rs 3,649 crore in FY22.

Amazon Internet (AWS) revenue nears Rs 9,000 Cr

Amazon Internet provides cloud related services including sales of computing, storage, database, and professional and training services. Revenue from these services soared 66% to Rs 8,956 crore in FY22 from Rs 5,405 crore in FY21.

Reseller fees are the largest cost for the company forming 74% of the overall expenses which stood at Rs 6,620 crore in FY22. 

Employee benefit costs widened by 47% to Rs 1,244 crore pushing overall costs to Rs 8,904 crore in FY22. In the end, Amazon Internet booked a loss of Rs 2.3 crore in FY22 against a profit of Rs 18.5 crore in the previous fiscal year (FY21).

Amazon Wholesale losses zoom 3X 

Amazon wholesale’s operating revenue grew 27% to Rs 4,592 crore. The company also made an additional Rs 13.4 crore as other income in FY22.

On the expense side, the cost for the attainment of products is the largest cost for Amazon wholesale, forming 94% of the overall expenditure which stood at Rs 4,803 crore in FY22. With a 34% surge in cost, losses of the company shot up 3X to Rs 480 crore in FY22 as compared to the previous fiscal year.

Amazon Data’s profit jumps 2.5X

Amazon Data, which provides hosting services to related entities, recorded an almost 40% increase in its revenue to Rs 3,540 crore in FY22. The company booked Rs 1,833 crore as depreciation, which forms 58% of the total cost. It added another Rs 421 crore and Rs 409 crore as communication and power/fuel costs respectively which widened its expenditure to Rs 3,122 crore in FY22.

As the scale grew, profits of the company increased 2.5X to Rs 327 crore in FY22 as compared to Rs 131 crore in the previous fiscal year (FY21).

Amazon Pay India’s collection grew 17% 

Consumer payment company Amazon Pay's revenue grew 17% to Rs 2,000 crore in FY22. The payment processing fee is the only source of operating revenue for the Unified Payments Interface (UPI)-based payment app.

On the expense side, advertising and payment processor charges were the largest cost centers of Amazon Pay India. Those alone accounted for 87% of the overall cost pushing total expenditure to Rs 3,793 crore in FY22. 

With a 15% surge in expenses, losses of the Bengaluru-based company grew 14.8% to Rs 1,741 crore in FY22 from Rs 1,516 crore in FY21.

Amazon Retail remains flat, loss fattened 22%

Sale of products from the retail segment grew only 8% to Rs 1,710 crore in FY22 from Rs 1,585 crore in FY21. Cost of procurement was the major cost for Amazon Retail forming around 60% of the overall expenditure. This cost was recorded at Rs 1,479 crore in FY22 while it added another Rs 567 crore and Rs 127 crore as legal/professional fees and platform selling fees, respectively.

While the company didn’t scale much, its expenses grew 12% which increased its losses to the tune of Rs 800 crore in FY22.

Entrackr’s take

Looking at these numbers, it is clear that beyond the obvious like Amazon Data, whose profits have been vastly understated due to the high depreciation charges, it is Amazon Marketplace (Seller Services) which would be the next cash earner. Amazon Internet is again a case of investing in a moat by Amazon, as the business delivers strong profits in other large markets like the US. 

With competition from Microsoft Azure, Google Cloud, even Jio and possibly Adani in the future, this is the business where strategies will be closely followed, as AWS has done the hard work of establishing a strong brand, infrastructure and customer base already. 

Amazon Wholesale, Retail and Pay will continue to be in the red for the foreseeable future, though their impact will be lower due to the relatively lower share in the Amazon pie in India. For Amazon, heading for $6 billion in FY23, and probably a much more ambitious number in FY 2030, the losses are not a worry at all, as the behemoth has made huge progress with each of the pieces of its portfolio. It’s a strategy it has perfected in its home market —the US— very well, and we in India will see this patience and resilience play out for at least the next 3-5 years.