Amazon India’s Wholesale Arm’s Loss Rises 3X To INR 480.3 Cr In FY22

Amazon India’s wholesale arm Amazon Wholesale reported almost a three-fold increase in its net loss to INR 480.3 Cr in the financial year 2021-22 (FY22) from INR 161.8 Cr in the prior fiscal year ending March 31, 2021.

Its operating revenue, generated from sale of products, increased a little over 1.3X to INR 4,592 Cr during the year from INR 3,618.1 Cr in FY21. The entity generated INR 4,605.4 Cr in total revenue in FY22 as against INR 3,628.7 Cr in the prior fiscal year.

Amazon Wholesale’s total expenses in FY22 jumped 34.2% to INR 5,085.7 Cr from INR 3,788.7 Cr in FY21. The entity deducted INR 462.9 Cr from its total expenses due to an increase in the inventories of stock-in-trade in FY22.

For the uninitiated, an increase in inventory indicates that the company produced more goods than it could sell in the particular year. 

On the other hand, its expense towards purchase of stock-in-trade was the biggest contributor to the overall expenses. It stood at INR 5,265.9 Cr in FY22 compared to INR 3,452.4 Cr in FY21.

Advertising and promotional expenses jumped 144% to INR 95.2 Cr during the period from INR 39 Cr in FY21.

Amazon uses its wholesale unit as a B2B distribution channel to supply products from various brands to third-party vendors in bulk quantities to enable them to sell on their online marketplaces. 

In November 2021, the US-based ecommerce giant infused INR 650 Cr (approx $87 Mn) into its India wholesale business.

Recently, Amazon also reported the financials for its other key businesses in India — Amazon Seller Services, Amazon Pay, and Amazon Transportation.

Amazon Seller Services, which runs its marketplace unit, managed to narrow its loss by 23% to INR 3,649.2 Cr in FY22, while the loss widened for the other two entities during the year.

However, all the entities saw an increase in their revenue, with the marketplace segment reporting an operating revenue of INR 21,462 Cr in FY22.

Amazon has been bolstering its investment and presence in the Indian market for quite some time despite the various regulatory pressures on the company.

Recently, brokerage Bernstein, in a research note, said that despite an investment of over $6.5 Bn in India, profitability remains elusive for Amazon India.

“At Amazon’s current valuation, we see the India business as a call option for Amazon investors, as long as the company is disciplined around capital allocation,” the analysts said.