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Amazon wholesale unit's revenue up by 73%, Flipkart's by 40% in FY18

Amazon Wholesale had tweaked its strategy following regulatory changes in early 2016, as a result of which it saw a staggering jump.

twitter-logo BusinessToday.In   New Delhi     Last Updated: November 13, 2018  | 12:54 IST
Amazon wholesale unit's revenue up by 73%, Flipkart's by 40% in FY18

The heady days of jump in revenues by leaps and bounds may be behind Amazon Wholesale, but the last fiscal was still a good one for it. The B2B arm of the ecommerce giant saw its revenue jump 73% to Rs 12,224 crore in the financial year 2017-18 as Amazon India increased focus on supplying to sellers on its consumer marketplace. In comparison, Flipkart India, the wholesale entity of Walmart-owned Flipkart, registered a 40% increase in revenue to Rs 21,000 crore in the last fiscal.

Amazon India and Flipkart use their wholesale units as distribution channels that source products from brands directly and then supply these to third-party vendors to sell on their online marketplaces. "For an ecommerce company, supplying through a wholesale arm means more control over the quality and supply chain, especially for de-risking categories such as electronics," Sreedhar Prasad, an industry expert on consumer business and ecommerce, told The Economic Times.

Amazon Wholesale had tweaked its strategy following regulatory changes in early 2016, as a result of which it had reportedly not only registered a profit of Rs 2.8 crore in FY17 - against a loss of Rs 23 crore in the previous fiscal - but also saw a staggering jump in revenues to Rs 7,047 crore from Rs 2.63 crore in FY16. The new ecommerce guidelines made it clear that sales from a single seller could not exceed 25% of the total GMV of a marketplace.

So in line with the new rules, Amazon India appears to have used Amazon Wholesale as a buyer and distributor to new sellers apart from a few main sellers such as CloudTail, which was its main seller till 2016. It also set up another seller entity, Appario Retail, in partnership with Patni group last year. According to the daily, this has seen Cloudtail's revenue growth stagnate. Cloudtail's revenue increased 27% to Rs 7,149 crore in FY18, a marginally higher growth from its 24% revenue jump in FY17. This is in contrast to its 300% revenue growth in FY16. Furthermore, several subsidies to the entity from Amazon have been cut.

Meanwhile, Appario, which reportedly posted a total income of Rs 759 crore in FY18, its first year of operation, has emerges as one of the biggest sellers.

Amazon and Flipkart recently emerged unscathed from allegations of favouring select sellers along with abusing their dominant market positions. The complaint has been filed by the All India Online Vendors Association, a grouping of over 2,000 sellers on various e-commerce marketplaces, but the Competition Commission of India, the fair trade watchdog, last week concluded that the business practices of Flipkart and Amazon are not in violation of competition norms.

(Edited by Sushmita Choudhury Agarwal)

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