Flipkart's largest unit posts hefty revenue growth, cuts losses

Any reduction in losses could mean the return of investor confidence, something Flipkart needs badly

Breaking News : Flipkart India Pvt Ltd, the largest unit of India's biggest e-commerce marketplace, was able to increase revenues by 43 per cent and cut losses by over 34 per cent in the financial year 2015-16 as investors began to mount pressure to see tangible results.

The Flipkart unit posted a revenue of Rs 13,177 crore for the 12 months that ended March 2016, compared to the Rs 9,226 crore in revenue it posted in the year ago period. Losses shrunk to Rs 544.6 crore, from Rs 826.7 crore in the corresponding periods, according to regulatory documents filed by the company.

While losses for its cash-and-carry business were down, it was offset by the higher losses posted by Flipkart's marketplace arm, bringing the total loss of the company to Rs 2,850 crore. The combined revenue for the two units stood at Rs 15,129 crore for the financial year.

Flipkart has set up a complex holding structure, with several entities listed in Singapore, making it hard to ascertain the exact revenue and loss figures.

Despite hefty growth in revenues in the previous financial year, investors continued to punish Flipkart's valuation. After a series of markdowns by mutual fund investors, Morgan Stanley set a valuation of just $5.58 billion for the three months that ended September. Flipkart had enjoyed a peak valuation of $15.2 billion, making it among the top valued start-ups in the world.Read more.

Mukesh Bansal logs out of Flipkart

Mukesh Bansal, who was heading the commerce and advertising business of Flipkart, quit on Wednesday, weeks after the co-founder of the country’s largest e-commerce company, Binny Bansal, became the chief executive officer.

Flipkart also lost another senior executive, Ankit Nagori, its chief business officer.

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Promising a seamless user experience

With e-commerce players in India wooing buyers by offering  heavy discounts, delivering a superlative consumer experience to time strapped and low on loyalty consumers is becoming all the more critical from the word ‘go’. Also, chances are higher that unlike a brick and mortar store where an unsatisfied customer tends to move on to a different store to pick up the brand that she desires, the same customer facing glitches on an e-commerce website will not think twice before hopping on to a competitor’s website. Recognising, this key behavioural pattern of consumers, e-commerce players are investing heavily in improving the user interface (UI) and user experience (UX) for consumers.

For instance, Jabong launched a new user-centric and responsive-designed app/website in August 2015. It launched the user-centric new design across front-ends, be it web, mobile web or apps. The base architecture of separate front-end and service-oriented architecture helps it in launching apps for new form factors like mobile and tablet, and all kinds of internet of things devices. The move has seen the online fashion retailer’s conversion rate going up by 12 per cent, meanwhile its bounce rate has gone down by almost 16 per cent.