eBay India’s sales jump three-fold, but losses mount


December 27, 2016

Richa Maheshwari, The Economic Times
Bengaluru, 27 December 2016

eBay India, one of the earliest online marketplaces in the country, posted a three-fold jump in sales in 2015-16. However, its losses widened to Rs 262 crore in FY16 from Rs 172 crore a year ago despite various costcutting initiatives.

The company posted revenue or income of Rs 392 crore for the fiscal 2015-16, according to its annual filing to the Registrar of Companies. It’s revenue stood at Rs 132 crore in the previous fiscal.

In comparison, Amazon Seller Services’ turnover for the previous fiscal rose 116% to Rs 2,217 crore, while Flipkart Internet’s sales increased 153% to Rs 1,952 crore during the same period.

These numbers are not earnings from actual goods sold on their portals, but transaction and listing fees from sellers and advertising revenue, which form an e-commerce site’s actual income. E-commerce firms charge sellers anything between 5% and 20% of the value of goods as commission.

“eBay is now playing defensive rather than strategic for some time as India is not a priority market for them. They have reconciled themselves as a small player and are now narrowing down their losses,” said Devangshu Dutta, CEO of consultancy firm Third Eyesight. 

“Investments by ecommerce giants Amazon and Flipkart have helped in expanding the footprint of the sector, especially of players with a small base like eBay,” he added.

The company declined to comment. “eBay India is a 100% subsidiary of eBay Inc and as a policy we don’t comment on country-specific financials,” said the official spokesperson of eBay India.

The company is now reducing its workforce in India by laying off engineers and data analytics professionals. Last Month, the company sent across an email to its employees in Bengaluru, saying, “We are also eliminating full time employee (FTE) and additional workforce (AW) roles supporting other domains in Bengaluru.

This is not a cost-cutting decision, rather, it is a decision to focus resources in locations with critical mass.” A copy of the mail seen by ETalso said that eBay will be hiring replacement roles at other locations particularly Shanghai and some in the United States. “A limited number of Bangalore based individuals will be asked to stay on for a transition period or offered relocation to the US.”

San Jose-based eBay bought local auction platform baazee.com for $55 million (about Rs 344 crore) to enter India in 2004, at a time when online retail was unheard of.

The company, however, lost its earlymover advantage in India to rivals Flipkart, Snapdeal and Amazon as these players took to investing heavily in customer acquisition by offering deep discounts. Last month alone, Amazon invested Rs 2,010 crore in its Indian unit, taking the company’s total investment in Amazon Seller Services to Rs 11,638 crore.

According to a Morgan Stanley Research released early this year, India’s ecommerce market will be pegged at $119 billion by 2020 against the earlier estimate of $102 billion, and the total Indian internet market size (including the online food-aggregation business) will grow to $159 billion from $137 billion.

(Published in The Economic Times)