5000 Crores lost……..

Free Money

Among the Big 3 Online merchants, the total loss for 2015 is more than 5000 Crores. Amazon loses 1700 crores from 1000 crores of sales. For every rupee of their income, they are spending ₹1.70, becoming profitable is a distant dream. Close to a billion dollar worth of money splurged by these online businesses on the Indian citizens in anticipation to make a big buck on a later date. It works to about ₹40 per Indian as we have a population of 125 Crores. And this means, each individual in India has profited ₹40 in 2015 just because of the belief & trust the investors worldwide have on the potential of our markets.

With the online market place business expected to grow at an average rate of 5 times the current business in the coming years, at least that is what these companies are projecting to their investors, the magnitude of loss is also going to multiply if not at the current pace, at least to some extent like 3 times. And this means that, the investors in the online businesses are going to throw away about another 3 Plus billion dollars into the Indian markets in the name of capturing market share.

Whether the e-tailers are going to capture market share and are able to make good of their losses, is not known, while in the bargain the Indian population is going to make big gains. Looking to have another ₹100 each as profits through this mad rush is possible in 2016 and it will continue till the deep pockets of venture capital funding gets dried out. Not all of our population will get the benefit, while the users of online market place in India is expected to be 40 Million in 2016 as per a report by NDTV, this 40 million people are going to get a share of the $3 billion loss that is going to happen. And it means a profit of ₹4500 for each user in 2016. There is a good amount of money out there for a grab……. Take advantage, enjoy shopping online.

Beyond the Online market place there are other service providers like OLA, UBER, BIG BASKET, etc., who are investing 100’s of crores to capture your market share and show to their investors which is success according to them. There is big money coming your way while you enjoy the technology that is going to come in as a new experience. Enjoy and earn too……

About Author

Ramesh Sigamani

Ramesh Sigamani

With over 3 decades of experience in capital market investments, Ramesh Sigamani is a trusted Financial Planner par excellence. He works personally with individuals and corporates to build a strong investment portfolio that stands firm against market volatilities and delivers time & time again.

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Comment ( 1 )

  • Ramesh Sigamani
    Ramesh Sigamani

    In 2016 e-commerce businesses continued to show very good growth in sales and so was their losses. Among the top 5, losses for 2016 is 4000 Crores. Even after VC firms tightened their purse strings, e-commence companies are in no mood to stop spending money on buying customers. How far these acquired customers will be loyal to them and take them to profitability in the coming years?
    Some thing bought at a price will demand the same treatment at any time, and how long will these companies keep funding customer purchases? Their aim is to transfer the burden to investors through IPO’s, as of this writing in December 2016, Flipkart valuations have come to 4.50 B$ from 15B$ a year ago. Though there will be IPO’s which will drain out investors capital through stock markets, part of the gains that will be made post demonetization will find its way to destruction here, not all the companies having the dream of offloading their losses to investors in stock markets will be achieved.
    It is going to be pretty hard time for the companies as well as their investors. One good that is happening and continues to happen is that, distribution of wealth will make the people of India have a good standard of living.

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