Vector E-commerce, an online seller that used to supply most of the products sold by Flipkart-owned fashion ecommerce portal Myntra, has recorded a 90% fall in revenue to $11.5 Mn (INR 81 Cr) for the year ended in March 2018 from $173.1 Mn (INR 1,216 Cr) in 2017.
According to reports, the online vendor has recorded a loss of $73.9K (INR 52 Lakh) in FY18 compared to a profit of $1.2 Mn (INR 9 Cr) last year.
The seller’s financial statements reportedly stated that Vector had a negative net worth of $883K (INR 6.21 Cr), as its liabilities in the year exceeded the net worth of its assets and equity. It also showed a working capital deficit of $2.2 Mn (INR 16 Cr) as of March 2018.
At its peak, Vector E-commerce used to account for 80% of the sales on Myntra.
The company had reported a drop in its revenue in February when sales fell by 30% drop in FY17 compared to the year before. The Bengaluru-based online seller, which was founded in 2010, had grown to become Myntra’s largest online vendor much like Amazon’s Cloudtail and Flipkart’s WS Retail.
Related Article: Myntra Revenue For FY 2018 Plummets By 80%
Vector’s Declining Business
Vector E-Commerce’s slide into losses began in 2016 after the Department of Industrial Policy and Promotion (DIPP) released guidelines to ecommerce players which directed that one vendor or a particular group of companies will not be allowed to drive over 25% of the total sales of the ecommerce company.
Myntra and Vector, which had worked closely till then — one of Vector’s owners, Prabhakar Sunder, was also the chief financial officer at Myntra — had to dilute the partnership.
In February 2016, Myntra started working with a new seller called Tech Connect Retail.
The directive further added that the ecommerce entity that is offering products to the marketplace will not directly or indirectly influence the sale price of goods or services.
The guideline has affected large online sellers working with Flipkart and Amazon as well.
In August, Flipkart’ s major retailer WS Retail reported that it’s revenue declined by 67% to $670.91Mn (INR 4,600 Cr) in FY17 from $2.02 Bn (INR 13,900 Cr) in FY16, causing it to stop working with Flipkart.
Meanwhile, Amazon’s biggest vendor Cloudtail fared slightly better, with a reported 27% growth in its revenue for FY18 from FY17. However, this was well below the explosive 300% growth the company registered in FY16.
[The development was reported by ET]