Amazon Seller Services’ losses narrowed to Rs 3,649.2 crore in FY22 from Rs 4,748.1 crore in FY21, data from Tofler showed. The retailer’s operating loss also narrowed to Rs 1,285.9 crore for the year to March, 2022, from Rs 2,970.6 crore in the previous year. Revenues from operations for the period went up by 32.4% to Rs 21, 462 crore.
Amazon Seller Services operates a marketplace on which it sells products both online in India and internationally.
According to analysts at Bernstein, a decade after a presence in India and $6.5 billion worth of investments, Amazon India’s report card is mixed. The analysts pointed out that India is one of Amazon’s biggest overseas markets and also one of its fastest growing with a best-in-class customer experience and large Prime customer base. “Yet, this growth has come at a high cost of over $6.5 billion+ invested to-date while profitability remains elusive (-5-10% Ebitda margins),” they observed.
The analysts added the company faces immense competitive pressure in fast growing categories, a weaker value proposition in ‘New’ commerce, limited traction in tier 2/3 cities, and an unfavorable regulatory environment for outsiders. They also observed that newer players like the SoftBank-funded Meesho are winning the faster growing tier 2/3 cities where Amazon has struggled to gain traction given low pricing and ‘zero commissions’.
Amazon has faced regulatory headwinds in India with some of the e-commerce rules favouring local players. A report by a Parliamentary standing committee on e-commerce, tabled in July, said the FDI policy is limited in addressing anti-competitive practices in the e-marketplace such as self-preferencing, lack of platform neutrality, deep discounting, exclusive agreements and preferential treatment to selected sellers. The committee dismissed the claims of e-commerce players that they have no control over the items sold on their platform.
They believe the e-retailers should act to resolve complaints about sub-standard and counterfeit products on their platform. The launch of ONDC (Open network for Digital Commerce), could change the e-commerce landscape in the country. Siddarth Pai, founding partner, 3one4 Capital, believes ONDC will empower consumers giving them a choice of service providers, transaction closure, payments and logistics. “They will have more bargaining power,” Pai said. He pointed out that the ONDC would pull down the walled gardens of incumbents and allow for easy and equal access to the seller pool for all participants. During the year, the company transferred its Amazon Devices business, including inventory, employees, related assets & liabilities and vendor/customer contracts related to its products to Amazon Wholesale (India).