India’s first e-books market is in danger of collapsing as many booksellers and publishers are trying to deal with the disruption caused by the arrival of e-book sales.
A slew of ebooks, including those from Indian publishers, hit the ground with a bang in September.
The country’s largest e-reader seller, Flipkart, says it’s lost about 50% of its e-commerce revenue since September, and has reported an 8% drop in the number of orders it receives for its ebooks.
Flipkarn’s chief executive Anurag Gupta told CNNMoney that the company is “burdened” by a $40 billion debt that the government imposed on the company in 2014.
Amazon and its online retailer competitor Flipkarts have faced similar financial woes.
Amazon’s $3.4 billion writedown in the second quarter was the largest in its history.
Flipkick, Flipbooks’ online marketplace, has been beset by several issues since it was spun off from Flipkarthas parent company Flipkarte in March.
Amazon and Flipkick are in talks over a new $7 billion deal that could result in a $50 billion investment, Gupta said in an interview.
Flipcarts woes also spilled over into Amazon’s e-store, Amazon’s first offline retail outlet.
Flipcart’s revenue fell by 30% last year and has now plunged to $3 billion, according to data from Euromonitor.
In a statement, Amazon said it is “aware of the issues that have arisen with the e-marketplaces in India.”
Flipkarna has been the largest ecommerce marketplace in India for years, but it has struggled to keep up with the rapid pace of ebook sales that have been flooding in over the past year.
Amazon’s struggles in India come as a new wave of ecommerce startups has emerged in the country.
In March, FlipKart acquired the ecommerce startup Myntra, which has become one of India’s most prominent ecommerce companies.
Amazon also acquired the online bookstore e-shop Flipbooks, which had been struggling to make money after selling only books and subscriptions for a year.
Amazon, Flipks e-tailer and the ereader maker Flipkama all acquired smaller companies in the last few months.
But with Flipkars e-business booming, Flipcart and Flipkarta are now facing new challenges.
Amazon has been looking to focus on smaller, more niche ecommerce businesses in order to get more business, Gupta told CNBC.
He said Flipkara, which launched last year, has yet to make any significant acquisitions and is focused on growing its online book business.
“They are focusing on the smaller ecommerce and ebooks,” Gupta said.
“We are a little worried about them.”
A few months ago, Flipbook had been in a bit of trouble with Amazon after a court order ordered the company to pay more than $1 million in back royalties, Gupta explained.
Flipbook said it was still waiting to receive the payment.
“We are waiting for a response from Amazon,” he said.
Amazon did not respond to CNNMoney’s request for comment.
In the last couple of months, Flipcart has also been struggling with an inability to pay suppliers.
Last year, it said it would be unable to pay a supplier who had not fulfilled an order.
The company said in its financial statement that it has paid suppliers nearly $600 million since April.
The payments are mostly due to delays in payment of orders from Amazon and other online retailers.
The shortage of suppliers is also causing FlipcART to lose money.
Flippay, the online payment service provider Flipcarna, says its bookstores are now losing about $10 million per month.