How India’s biggest online travel aggregator is opting for scale in a trade-off with the bottom line. But can it replicate the success of the US ecommerce giant?
The numbers were alarming, and unprecedented. For the June-ended quarter of fiscal 2018, marketing and sales promotion expenses of MakeMyTrip (MMT), India’s biggest online travel aggregator (OTA), rose to $142.3 million, higher than its net revenues of $141.2 million. Losses widened to $52.1 million, up from $33.1 million in the March-ended quarter.
The signs looked ominous, especially as it was the first full quarter after Ibibo’s financials were consolidated with MMT's. The Nasdaq-listed company (Naspers came on board after the merger of Ibibo) had bought its nimbler rival for $1.1 billion in October 2016.
A year later, little appears to have changed. Although operating losses dipped to $23.5 million for the fourth quarter of the Marchended fiscal year 2018, sales and marketing costs as a percentage of net revenue stayed high at 81.2 percent.
So, is MMT Chairman and Group CEO Deep Kalra worried? Not quite. His reasoning: To build a hotel business, in a highly under-penetrated Indian market, investments are required. The priority, then, is growth, not the bottom line.
“We can bring that [investment] down, and turn profitable. But that will hit our growth,” he argues. At this stage of the market, he lets on, one can’t afford to go slow. “We have to maintain our market share and keep growing. It’s critical. It’s all about the long term.”
Denne historien er fra August 3, 2018-utgaven av Forbes India.
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Denne historien er fra August 3, 2018-utgaven av Forbes India.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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