Balance sheets of India’s e-commerce firms have red ink splattered all over them and it doesn’t look like the bleeding will stop anytime soon, reports fe Bureau in New Delhi. Few businesses are moving towards becoming profitable though growth projections are becoming loftier.
Indeed, a slowing economy and the recent cash crunch have dampened demand as has the sharp reduction in discounts. For the year to March 2015, losses for a clutch of 49 companies crossed R16, 000 crore; only a handful of firms — BookMyShow, Jabong and Olx India — reported a profit. Media reports talk of how Snapdeal is strapped for cash and how critical it is for the company to raise funds.
Money raised by internet companies dropped to a three-year low in the December 2016 quarter, with less than $300 million coming in. In fact, funds were hard to come by in 2016 and the $2.7 billion that was invested was 50% lower than the amount invested in 2015. For a perspective on how cautious investors have become, they had infused $2.6 billion in a single quarter in the three months to September 2015.
According to Jefferies, e-retailers will focus on profitability this year; the brokerage believes consolidation in the sector would continue.