Flipkart’s wholesale unit sees revenue growth slow

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Bengaluru: Flipkart India Pvt. Ltd, the wholesale unit of India’s largest online retailer, posted slower revenue growth in the year ended March, regulatory documents show.

Flipkart India’s revenue rose 18% to Rs15,264 crore ($2.37 billion) for the year ended 31 March from Rs12,818 crore in the previous year, according to documents posted with the Registrar of Companies on Thursday.

In the previous financial year of 2015-16, the wholesale business had registered growth of 34%.

Flipkart did not specify a reason for the slowdown in the growth of the unit in the regulatory documents and also did not respond to an email from Mint on Thursday seeking comment.

Since Flipkart started out in 2007, the online retailer has adopted a complex corporate structure to accommodate all its subsidiaries, since India bans foreign direct investment (FDI) in online retail.

To put it simply, this is how Flipkart typically generates revenues: the online retailer sources goods from manufacturers, sells those goods to many of its small and large third-party sellers who, in turn, offer those products to shoppers. Flipkart also provides the technology platform and logistics services and takes a commission on every sale on its site.

Last year, along with Flipkart Internet Pvt. Ltd—the e-commerce marketplace, which books commissions on each sale—the two Flipkart entities together had generated roughly Rs15,129 crore ($2.2 billion) in 2015-16, compared to Rs10,390 crore in the previous fiscal year.

Earlier in December, Amazon India’s wholesale business reported revenue of Rs7,047 crore, with the business having grown manifold during the 12 months up to March 2017.

Amazon, however, adopts a different structure for its wholesale B2B business, and hence the figures of Flipkart India and Amazon Wholesale India are not comparable.

Earlier in December, Mint reported that Flipkart recorded a 43% jump in gross merchandise value for the six months ended 30 September, as per estimates from South Africa’s Naspers, which is one of the largest investors in Flipkart. Flipkart, however, disputed those figures later and clarified that the figure cited by Naspers included “a time lag” and that the firm’s sales actually grew by “at least 80%” in April-September.

Flipkart, which is registered in Singapore, is yet to post the complete set of its annual documents for the 2016-17 financial year.

Over the past 12 months, Flipkart has shown signs of being back to its former, dominant self, after spending much of 2016 battling against and conceding market share to arch-rival Amazon India. Since the beginning of the year, Flipkart, under former Tiger Global Management executive and current CEO Kalyan Krishnamurthy, has raised nearly $3 billion in fresh funds from Japan’s SoftBank, China’s Tencent Holdings, eBay and Microsoft.

The latest fundraise has given Flipkart enough ammunition to keep Amazon, which has pledged to invest at least $5 billion in its Indian business, at bay in the near future. Flipkart further cemented its position as India’s leading e-commerce business in the recent festive season showdown, where it handily trumped Amazon India—although Amazon has repeatedly disputed that it lagged Flipkart (excluding sales from Myntra and Jabong).