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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)
