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Amazon maintains lead over Flipkart as its India marketplace revenue surges 49% in FY 2021

Written by Moulishree Srivastava Published on     3 mins read

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E-commerce giants Amazon and Flipkart saw their revenue from operations surge by 49% and 32% respectively in FY 2021 as millions of people opted to shop online due to the COVID-19 pandemic.

Amazon India, the local arm of American e-commerce giant Amazon—the largest e-retailer in the country by revenues—has maintained its lead over homegrown rival Flipkart, which was acquired by US retailer Walmart in 2018.

Amazon Seller Services, which runs the online marketplace for Amazon India, posted INR 162 billion in operating revenues for the financial year (FY) ended March 2021, a 49.3% increase compared to a year-ago period, while the marketplace arm of Flipkart, Flipkart Internet, clocked INR 78 billion in revenue from operations, up  32% over FY 2020.

Furthermore, Flipkart Internet widened its losses by 48.8% to INR 28.8 billion compared to the previous year, whereas Amazon slashed its losses by over 18% to INR 47.48 billion from INR 58.49 billion in FY 2020, as per the regulatory filings sourced by local media Economic Times.

This is despite the fact that Walmart-owned Flipkart has been able to grab a bigger market share of the gross merchandise value (GMV)—the total monetary value of products sold online—in Indian annual festive season sales (also known as Diwali sales) that happen between October and December, for the past several years. Amazon narrowed the gap in GMV during last year’s festive sales. As per PGA Labs’ data, despite a clear lead, Flipkart’s Diwali sales market share dipped by 5% in 2021 from 65% a year earlier. On the other hand, Amazon India climbed up to 32% last year, up 7% from 25% in 2020.

However, Flipkart has had the upper hand in the wholesale business since acquiring its parent’s India wholesale unit in 2020.

The wholesale arms of Amazon and Flipkart buy products in bulk from manufacturers and sell them to retailers, neighborhood stores, and small businesses, which include vendors who then sell those items on these marketplaces.

Flipkart India, the wholesale unit of Flipkart, saw a 25% surge in revenue from operations to INR 429.4 billion in FY 2021, while it reduced its losses by 22% to INR 24.45 billion over FY 2020. Amazon Wholesale, the wholesale arm of Amazon India, reported a 7% drop in revenue from operations which stood at INR 31.31 billion in FY 2021, and a net profit of INR 460 million compared with a net loss of close to INR 1.32 billion a year earlier.

Amazon’s wholesale business has been declining over the past two years. Its revenue had nosedived by 70% in FY 2020. This is due to the country’s tightened foreign direct investment rules, which ban vendors controlled by an e-commerce marketplace from selling their goods on that marketplace. As per the government regulations, the inventory of a seller is deemed to be controlled by the marketplace if more than 25% of the vendor’s purchases are from the marketplace entity, including its wholesale unit. To comply with the rules, Amazon Wholesale had to cut down the stock it was selling to related platform vendors.

Since its entry into India in 2013, Amazon has spent more than USD 7 billion fighting with Flipkart to gain market share and establish its e-commerce empire in the country. Currently, it is involved in a legal battle with Future Group, in which Amazon invested in 2019, over the latter selling its wholesale, logistics, and warehousing business to Reliance in 2020. Meanwhile, India’s anti-trust body, the Competition Commission of India, is investigating both Amazon and Flipkart for anti-competitive practices.

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