E-tailers in Asia’s third-largest economy are in fix.
With investors demanding results after pouring in millions worth of funding, companies such as Flipkart and Amazon have resorted to aggressive advertising and discounting to attract customers. But while that has paid off in terms of sales, with many online retailers seeing huge jumps in revenue for the financial year that ended on March 31, 2016, losses have mounted.
“I am not really disturbed about these losses,” said Sanchit Vir Gogia, Chief Analyst and CEO of Research & Advisory firm Greyhound Research. “What I am really concerned about is the quality of products these firms sell, and how they are managed. For instance, I’d be very worried if their product returns have increased, which pull up their costs and in turn result in losses,” he added.
For Gogia, product returns at an online seller shouldn’t exceed 10% of sales. Anything beyond that would result in even bigger losses to come.