GROW UP

Dear Flipkart and Amazon, sales are measured in rupees—not Burj Khalifas

E-commerce companies are trying to reach the tallest heights.
E-commerce companies are trying to reach the tallest heights.
Image: Reuters/Jumana ElHeloueh
We may earn a commission from links on this page.

Forget revenue and profits, India’s largest e-commerce firms seem to believe the height of Dubai’s Burj Khalifa is a fair metric to measure their performance.

At the end of their annual flagship festive season sales, the online retailers, notorious for their window-dressing metrics like gross merchandise value (GMV) and net promoter scores, measured their success in buildings and mountains.

For example, here’s what Amazon India said about its five-day sale that ended on Oct. 15:

If all the Lego Bricks bought from Amazon India during Great Indian Festival were stacked, the tower so formed would be taller than Burj Khalifa.

Meanwhile, the over-828-metres Burj Khalifa, the tallest building in the world, was also used as a benchmark by Flipkart in its report card for its Big Billion Days (BBD) sale that ended on Oct. 14:

Length of mobile cables sold (was) 100x the height of Burj Khalifa.

But the absurd comparisons didn’t end there. Mount Everest, aircraft, and elephants—they used them all:

“It is a competitive market and both (Flipkart and Amazon) want to talk about how they are the leaders and in the absence of data use other ways mentioned as surrogates,” said Harish HV, an independent consultant who tracks India’s startup sector. “It is part of brand building and to tell the market and customers that we are bigger and better and hence you should buy from us.”

The problem, though, is that such fantastical data does not convey much about how a company actually fared.

Ludicrous metrics

Take, for example, this measure of success shared by Flipkart: “five shoes sold per second” during BBD.

Though impressive at first glance, it says little about how much money Flipkart made, because online marketplaces pocket only a small cut—sometimes not even that—on such sales.

Similarly, when Amazon says a particular product sold five times more than it did during last year’s sale, there is ambiguity. Though experts say these companies deal with fairly large bases, nobody knows exactly how big a jump it is unless the company shares the previous year’s absolute numbers.

Also, these figures don’t account for the onslaught of product returns that follow the shopping frenzy.

“Organisations often use various metrics to define success and marketers use interesting comparisons like the ones used by Flipkart to communicate the effectiveness of campaigns,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research. “Soft metrics work well to communicate to consumers at large but investors and the street always need hard metrics to measure the success of a company.”

In the meantime, requests to get access to some hard financial figures are mostly met with standard responses: Flipkart is a privately held company and thus not obliged to share financials publicly, and Amazon does not split its numbers for India separately.

Startup, grow up

E-commerce is no longer a nascent business in India.

Flipkart, India’s largest homegrown e-commerce portal, has been around for over a decade. And Amazon forayed in five years ago.

The two rivals have their coffers full. In May this year, Bengaluru-based Flipkart got an $18 billion funding push after the world’s largest retailer, Walmart, acquired it. Amazon.in has a strong backing from its Seattle-based parent, which has repeatedly pumped billions of dollars into its Indian arm.

But while stacks of items they sell can shame the Everest, the companies continue to bleed.

“These players have created a World Cup of their own and these figures are a way of one-upmanship. But if you give deep discounts, you will sell. The question is when is all of this going to end and when eventually are these companies going to start at least moving towards profitability?” said Ankur Nigam, partner at KPMG. “With all this ‘I can stack my refrigerators up to the moon’ talk, they should also share what loss they’re making during this season or what losses they’re cutting.”