Flipkart leads rival Amazon as e-tail heats up amid Covid-19

For years, India's two largest ecommerce platforms – Flipkart and Amazon India – have lured customers with eye-popping discounts, especially during their flagship festive sales.

As the Covid-19 pandemic brings millions of shoppers online, many for the first time, both the e-tailers intensify their battle vying for dominance in India’s fast-growing ecommerce market.

While Walmart-owned Flipkart continues to corner a bigger revenue share of the country’s overall ecommerce pie, its arch rival Amazon India is catching up.

Combined operating revenue of Flipkart's two main units - Flipkart India and Flipkart Internet - grew 25% and 32.5% year-on-year, respectively, to ₹50,781 crore in FY21. Meanwhile, Amazon India's two key entities – Amazon Seller Services and Amazon Wholesale (India) - reported combined operating revenue of ₹19,331 crore in the fiscal.

Operational revenue of Amazon Seller Services, the parent firm of Amazon India marketplace, rose 49% year-on-year to ₹16,200 crore in FY21. Its wholesale unit, Amazon Wholesale (India), saw around 8% drop in operating revenue to ₹3,131 crore in FY21 compared with ₹3,384 crore in FY20.

Flipkart India, on the other hand, reported a 25% rise in operating revenue to ₹ 42,941 crore in FY21, while losses contracted 22% to ₹2,445 crore, according to regulatory filings shared by business intelligence platform Tofler. The Walmart-owned e-commerce firm’s total expenses stood at ₹45,801 crore, the filings showed.

Flipkart, whose parent firm is registered in Singapore, operates in India through a number of subsidiaries.

Flipkart Internet, the marketplace unit of the etailer, clocked a 32.5% rise in revenue from operations to ₹7,840 crore during the same year, while losses widened 49% to ₹2,881.3 crore, according to a separate filing sourced from Tofler. Its total expenses grew 33.2% to ₹10,996.3 crore in FY21, led by a significant jump in employee benefit costs and other expenses. Flipkart Internet garnered around ₹2,794 crore in revenue from marketplace services, followed by logistics services at over ₹2,445 crore.

Amazon Seller Services' losses, however, narrowed 23% to ₹4,748 crore in FY21 from ₹5,849 crore in FY20. The US giant spent ₹6,332 crore on delivery charges in FY21, up from ₹4,603 crore in FY20. It also raked in ₹7,555 crore revenue from offering marketplace services compared with ₹4,949 crore a year earlier.

Ecommerce players like Flipkart and Amazon India are facing increased competition from the country’s largest conglomerates – Tata Group and Reliance Industries – as they plan the rollout of their super apps. On January 4, Fortune India reported that the Shriram Group will launch a super app for its financial products as well as for selling products of its partners.

In July 2021, Flipkart had raised $3.6 billion at a $37.6 billion valuation in its first external financing round since it was acquired by Walmart in 2018. It also acquired travel booking platform Cleartrip and e-pharmacy SastaSundar last year. The company recently invested $145 million in agritech startup Ninjacart along with its parent.

Flipkart's social commerce app Shopsy forayed into groceries last month. The platform allows users to become resellers of goods in their network through apps like WhatsApp.

Ecommerce under CCI lens

In August last year, the Supreme Court of India upheld the investigation ordered by the Competition Commission of India (CCI) into alleged anti-competition agreements entered into by ecommerce majors Amazon and Flipkart.

Last month, the antitrust watchdog withdrew its approval of the Amazon-Future Group deal and imposed a penalty of ₹200 crore on the US tech giant. The action came in the backdrop of a review of allegations that Amazon had suppressed information while seeking approval for the deal.