New Delhi: Online retailer Snapdeal may clock a five-fold increase in losses going upto $250 million (Rs 1,500 crore) this fiscal, as estimated by an investor in the company, high cost of operations continues to drag down India's top Internet retailers that are growing at breakneck pace.
According to the English daily Economic Times, the company is also expected to sell goods worth $1.6 billion at the end of March 2015.
Snapdeal is about 30% behind Flipkart and Amazon in terms of Gross Merchandise Volume (GMV) and the efforts are being taken aggressively with the discounting and expansion of product categories to fill the gap. More than $20 million every month in an aggressive strategy to discount deeper, acquire new companies and build a technology platform that will help grow targeted sales.
GMV is industry jargon for value of goods sold on online marketplace. Snapdeal, which claims to have 100,000 sellers, is locked in a battle with larger rivals Flipkart and Amazon for leadership in India's etail market.
The company, which had sales of $322 million at the end of March 2014, will post a five-fold growth in GMV this fiscal, according to the report. On an annualised basis, the company has a sales run-rate of close to $2 billion with gross margins of 11-12%, the report noted.
A spate of big discounts has helped Indian online retailers attract consumers in droves, marking the coming-of-age of Internet commerce in 2014. Much of this frenetic activity has been made possible by record inflows of risk capital into the sector.
The top three contenders, Amazon, Flipkart and Snapdeal, together received about $5 billion in funding last year, as they chase growth at the expense of profits. The business model is backed by investors, who are betting that one of the three will emerge as a winner in an industry that is projected to reach $43 billion in value by 2019 as reported by ET.
Experts are of the view that with rising Internet penetration, nearly 250 million Indians now have access to the Internet on desktops and phones, the focus for ecommerce companies will be to build scale and acquire more customers.
