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Snapdeal Continues To Lose Money

Snapdeal, one of the major e-commerce players in India which counts SoftBank and Kalaari Capital as investors among others, declared losses at INR 4,647 crores (~ $715 million) For FY 2016-17, according to a regulatory filing.

The losses include a provision for goodwill impairment of INR 1,797 crores (~ $276 million).

This is about 39% increase in losses from FY 2015-16.

At the same time, the company’s (Jasper Infotech, which owns Snapdeal) revenue is down by 12.6% to INR 1291.3 crores from INR 1478.2 crores in the previous year.

According to a company’s spokesperson, Snapdeal continues to focus on unit economics and business efficiencies and the results of these efforts are to be seen in the FY 2017-18.

He said, “Key highlights in this regard are the reduction in fulfillment cost by more than 20 per cent (as a percentage of operating revenue) and reduction in operational losses by nearly 25 per cent (excluding non-recurring cost on account of impairment of assets)”

Snapdeal was started in 2010 as an online deals platform, which later emerged as an e-commerce marketplace platform in 2011. It was seen as a strong contender to other major e-commerce players like Flipkart and Amazon India, however, the stiff competition has severely impacted the Snapdeal’s growth.

Apparently, SoftBank who is the major investor in Snapdeal is also a key investor in Flipkart and PayTM mall.

With the investor-driven consolidation seen in travel startup space recently in Asia (Uber sells its South East Asian business to Grab), it would be interesting to see how consolidation emerges in e-commerce space in coming years.

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