Amazon India’s Marketplace Narrows Loss In FY22 On 32% Rise In Operating Revenue

Amazon India’s marketplace business Amazon Seller Services reported a 23% year-on-year (YoY) decline in loss to INR 3,649.2 Cr in the financial year 2021-22 (FY22) on the back of a strong growth in operating revenue. 

Amazon Seller Services’ operating revenue grew over 32% to INR 21,462 Cr in FY22 from INR 16,200.3 Cr in FY21, with the sale of marketplace services to customers contributing about 44% to it.

The sale/rendering of marketplace services to its customers earned the Indian arm of the ecommerce giant a revenue of INR 9,414.3 Cr in FY22 as against INR 7,555 Cr in the prior fiscal year.

On the other hand, rendering of other marketplace-related services helped Amazon Seller Services earn INR 4,171.4 Cr in FY22, a 63% YoY increase from INR 2,554.2 Cr in FY21.

It is pertinent to note that Amazon India’s month-long ‘Great Indian Festival’ sale, which last took place in October 2021, saw its highest-ever sales, with 30,000 sellers and brand partners on the platforms clocking sales worth over $100K.

Amazon Seller Services, whose biggest competitor in India is Walmart-backed Flipkart, earns its revenue from product sales, platform fees collected from third-party sellers, subscription services, sales of advertising services, among others.

Amazon India’s marketplace business’s total revenue in FY22 stood at INR 21,633.4 Cr as compared to INR 16,378.9 Cr in FY21, with its other income coming mainly from interest income on current investments and fixed deposits.

Meanwhile, total expenses grew 19% to INR 25,282.6 Cr in FY22 from INR 21,127 Cr in FY21. The largest contributor to overall expenses was transportation distribution costs at INR 6,751.2 Cr.

The next biggest contributor to expenditure was legal professional charges at INR 3,498.5 Cr. In FY21, it was at the third position with expenses of INR 2,454.4 Cr.

The entity’s advertising and promotional expenses, which stood at second position at INR 2,728.4 Cr in FY21, rose to INR 3,426.4 Cr in FY22, but took the third position in terms of contribution to total expenses.

Amazon Seller Services’ employee benefit expenses in FY22 grew over 20% to INR 2,192.7 Cr from INR 1,819.8 Cr in FY21.

Amazon has been facing regulatory and legal troubles in India for years, with a slew of allegations being levelled on the US-based ecommerce giant. After facing allegations of anti-competitive behaviour for years for prioritising certain sellers, the Competition Commission of India (CCI) raided the offices of Amazon India’s two top sellers — Cloudtail and Appario, this year.

Despite its presence in India for nearly a decade, profitability remains “elusive” for Amazon and the ecommerce company continues to lag behind not only Flipkart and Reliance but also new-age social commerce players like Meesho in various aspects, brokerage Bernstein said recently. However, Amazon continues to bet big on the Indian market.

Recently, Amazon said that it would continue investing in emerging markets like India, while Amit Agarwal, SVP India and emerging markets at Amazon, said in May that the company expects cumulative exports from its platform in the country to reach $20 Bn by 2025.

In 2020, the ecommerce giant had set a target to facilitate cumulative exports worth $10 Bn from India in the next five years.

Meanwhile, with its ‘Great India Festival 2022’ all set to start from September 23, Amazon has waived 50% selling fees of sellers that have recently joined the platform. It remains to be seen how the move affects Amazon Seller Services’ top and bottom line in FY23.