How Flipkart as a marketplace and its top vendor grew last year

India's top online retailer Flipkart is estimated to have continued to generate bulk of its sales from what was legally its former in-house vendor last financial year.

WS Retail Services Pvt Ltd, which was the only vendor on Flipkart.com before it turned into a marketplace two years ago, almost matched the revenue growth rate of the firm that provides the platform for other small individual sellers to sell to the consumer.

With 224 per cent growth, WS Retail notched sales of Rs 10,163.4 crore for the year ended March 31, 2015. Flipkart Internet Pvt Ltd, which now owns the domain name Flipkart.com, saw its top-line jump 268 per cent to Rs 659.4 crore for the same period (see interactive chart). Flipkart Internet is owned by Flipkart Marketplace Pvt Ltd, Singapore, which in turn is owned by the main holding firm Flipkart Pvt Ltd, Singapore.

Interestingly, WS Retail had a net worth of just around Rs 5 crore despite churning huge revenues, as per filings with the Registrar of Companies. Meanwhile, Flipkart Internet had a net worth of Rs 4,1819.4 crore as of March 31, 2015.

Flipkart Internet does not sell products itself. Its revenue comprises listing fees and other platform services provided to third-party vendors, including WS Retail. Its detailed financials for the last fiscal year are not available yet. However, for 2013-14 its revenue was Rs 179 crore and it had posted net loss of Rs 315.9 crore, which could be explained by discounts and other customer acquisition costs for the site.

While revenue from the marketplace grew just a tad faster than that of the main vendor, this could also be a factor of change in fee percentage and ad revenue for the site. Either way, with WS Retail almost matching the growth of Flipkart Internet, it is estimated to continue to account for well over half of the sales on Flipkart.com.

Even though aggregate sales clocked by Flipkart are not made public, based on public disclosures on its gross merchandise value "the value of goods sold through the site – it would have clocked month-on-month growth of around 10 per cent from April 2014 through March 2015, as per VCCircle estimates. This would give it anywhere between Rs 14,000 crore and Rs 17,000 crore in sales last financial year, making it the second-largest retailer in the country.

Reliance Retail, the top physical retailer, had notched up sales of Rs 17,640 crore in the same period.

A Flipkart spokesperson didn't reply to a Techcircle.in mail seeking comments on its financials.

WS Retail, which was legally separated from the Flipkart founders and its venture capital investors three years ago, is now owned by former IT professional and angel investor Rajiv Kuchhal and some employees of Flipkart.

However, it remains the key seller on the marketplace. It not only provides exclusive products, such as the runaway hit Moto brand of Motorola phones and till recently Xiaomi smartphones in India, but also the main vendor associated with the Amazon Prime-like membership service Flipkart First. Initially, it was the sole vendor for Flipkart First but later the scope of the membership facility was expanded to include third-party vendors.

Other Flipkart firms Flipkart India Pvt Ltd, which previously owned the domain name Flipkart.com and had licensed it to be run by WS Retail before the venture turned into a marketplace, generated turnover of Rs 9,351.7 crore, up from Rs 2,846 crore in FY14 and Rs 1,180 crore in FY13. It had a net worth of Rs 4,725.9 crore as of March 31, 2015.

Flipkart India is into wholesale trade business and also houses logistics and other services provided by the firm. It could not be ascertained how much of WS Retail's products are routed through this company.

Separately, another group firm Flipkart Logistics Pvt Ltd (formerly Flipkart Payment Gateway Services Pvt Ltd), which previously provided payment gateway and technical support services, saw its revenue more than double last year.

This firm, which generated almost two-thirds of its sales through payment gateway services till last year, changed its business early this year where it transferred its core operations to Flipkart Internet in February. In April, it changed its article of association to change its prime business to logistics services.

Flipkart Pvt Ltd, Singapore, which has attracted all the foreign investors in Flipkart, also has other smaller Indian arms including Flipkart Digital Media Pvt Ltd and Flipkart Online Services Pvt Ltd, which was earlier the main holding company of the group.