Amazon’s wholesale arm sees revenue surge, losses widen in FY18

Amazon Wholesale India Pvt. Ltd, the wholesale business-to-business arm of e-commerce giant Amazon, has seen its operating revenue rise but losses widen due to higher expenses for the financial year ended 31 March 2018, its filings with the Registrar of Companies show.

The company’s operating revenues rose 73% to Rs 12,242 crore ($1.74 billion) from Rs 7,047.30 crore in 2016-17. Net losses widened to Rs 131.40 crore in 2017-18 from Rs 2.8 crore in the year prior, the firm’s standalone financial statement showed.

Amazon’s standalone arm recognises revenue from the sale of goods in bulk.

The company’s gross expenses surged a significant 75% to Rs 12,377 crore ($1.76 billion) from Rs 7,058.90 crore in the previous year. Because of the business model, purchase of traded goods accounted for the major expenses which stood at Rs 12,189 crore, amounting to 98% of the total expenses incurred.

E-mail queries sent to Amazon seeking comments on the company’s latest financial performance did not elicit a response at the time of filing this report.

Amazon Wholesale India is a subsidiary of Singapore-based Amazon Corporate Holdings Pvt. Ltd, its associate company and parent. The wholesale unit was incorporated in 2013, the same year that Amazon entered India. However, the e-commerce major formally launched its wholesale B2B marketplace Amazonbusiness.in only in May 2015.

The B2B wholesale marketplace specifically caters to small offices, entrepreneurs, department stores, kirana stores, drugstores, clinics, hospitals, hotels and restaurants. Currently, Amazonbusiness.in operates only in Bengaluru and Mangaluru.

In 2016-17, in its first full year of operations, Amazon Wholesale India generated over $1 billion in sales. According to a recent TechCircle report, this was two times what Walmart's 21 wholesale stores in India generated in the same year, revealing the scale of competition that the world’s largest physical retailer faces in India.

E-commerce majors in the country operate wholesale businesses in order to have better control over their inventory. Amazon’s wholesale arm has received fewer capital infusions from its parent as compared to its e-commerce marketplace and payments arm.

Last July, it received Rs 341 crore ($52.6 million) and prior to that, it got Rs 160 crore in December 2016.

Earlier this month, Flipkart India Pvt. Ltd, the wholesale arm of Walmart-owned e-commerce giant Flipkart, received a fresh capital infusion of $304 million (around Rs 2,190 crore) from its Singapore-based parent.

Paytm Mall, the e-commerce arm of SoftBank and Alibaba-backed digital payments major One97 Communications Ltd, also entered the B2B wholesale space by incorporating Paytm Wholesale Commerce Pvt. Ltd in September.