Amazon India’s ad revenue up 28% in FY23, losses widen

Amazon India, a key player in India’s burgeoning e-commerce market, has unveiled its financial report for 2023, which showcases how it's advertising operations are likely to become its next great business. 

The standout performer in the portfolio of Amazon India Sellers Services (which runs the Amazon India marketplace) is its advertising revenue, which witnessed a substantial increase, about 28 per cent, from ₹4,171 Cr in the FY22 to ₹5,380 Cr in the last fiscal, regulatory filings sourced from business intelligence firm Tofler showed.

Although the growth rate has come down, compared to 63 per cent growth (₹4,170 crore) in FY22, it still looks decent in respect to Meta India, which reported 13 per cent growth in FY23, compared to 74% a year earlier. 

The company's revenue from operations saw a commendable uptick, reaching ₹22,198 Cr, up from ₹21,462 Cr in the preceding fiscal year. 

Besides product sales, its revenue is generated from multiple sources, including subscription services, royalties, fees for offering its marketplace to sellers and services such as shipping, advertising and others.

During the year, the company reported losses of ₹4,854 Cr in FY23, a notable rise from ₹3,649 Cr in the previous fiscal year. The marketplace had managed to reduce its losses to ₹3,649 crore in FY22 from ₹4,748 crore in FY21.

In India, Amazon ranks as the second-largest e-commerce company, trailing behind Walmart-owned Flipkart, with a gross merchandise value ranging between $18-20 billion. 

Despite being a key market and one of the fastest-growing ones for the tech giant globally, its profitability remains elusive due to the market's average order value, which hovers below $10 (approximately ₹800), as reported by Bernstein, a US research and wealth management firm.

The company didn’t respond to email queries in this regard. 

Growth in challenging times

Amazon’s ad business continued to boom amid muted digital ad growth in the country due to global economic headwinds and inflation that marred FY23. 

It also underscores the company's successful monetization of its advertising platform, capitalizing on its increasing footprint in the country, experts say. 

Riding on 25 million SMBs, Amazon commanded over 8% of the overall online ad market in FY22, trailing Google India (Rs 24,000 Cr), and Facebook India (Rs 16,000 Cr). Google India’s report for FY23 is still unavailable. 

In India, Flipkart and Amazon both have massive traction, as online retail is growing at a stupendous pace and most of the consumer brands are allocating 20-30 percent of their overall digital spends into online retail platforms, industry experts say. 

The retail media market has come a long way since Amazon first launched its network in 2012. It is currently one of the fastest growing advertising channels globally. As per eMarketer, the US retail media search ad revenues will grow at a rate nearly four times faster than the rest of search advertising this year.  

This growth is primarily driven by the expansion of the e-commerce sector, which is expected to grow from $100 billion to $350 billion by 2030.