Despite its global expertise, Amazon hasn’t quite managed to disrupt the Indian e-commerce space like Flipkart. In fact, it leveraged a market created primarily by Flipkart and Snapdeal. During the initial days, both Indian e-commerce companies saw a steep spike in revenues and valuation. The reason for this boom was the growing penetration of mobile internet devices coupled with faster internet speeds. And, of course, a growing affinity and level of trust for online shopping. Just like any other sector, e-commerce too was crowded. Also Read - iPhone 11, iPhone XR up for grab with massive discount on Flipkart Big Saving Days saleAlso Read - Flipkart Big Saving Days sale begins: Pixel 4a, Realme X7, Samsung Galaxy F62, more on discount
Cut to 2017, the Indian e-commerce space looks very different from what it used to a decade ago. From embracing the marketplace model to several smaller companies losing steam, the current state of the e-commerce looks calm on the outside, but deeply fragile within. Despite operating in India for years, even remaining unchallenged for a long time, Snapdeal and Flipkart didn t seem to sustain the momentum. Last year, Flipkart reportedly laid off about 300 employees whereas Snapdeal has all but confirmed its sellout plans. ALSO READ: Snapdeal founders Kunal Bahl, Rohit Bansal’s letter to employees all but confirms sale speculations Also Read - Redmi Note 10S with Rs 1,000 discount on Amazon sale: Check offer details, new price
In a replay from the Indian telecom sector, a fragmented market now seems headed towards a phase of consolidation. Clearly, the top two players would be Amazon and Flipkart. And talking of Amazon, it reportedly invested approximately Rs 2,000 crore in India last year. Taking its total investment to approximately Rs 7,000 crore. According to a December 2016 report, Amazon s revenues rose to a whopping 116 percent to Rs 2,217 crore in the previous quarter.
We will invest what it takes to become the customers preferred choice in India, and are encouraged that we are India s largest and fastest-growing ecommerce marketplace. In an industry reportedly flat or negative, Amazon India has continued to show remarkable growth of over 100 percent this year, an Amazon spokesperson had told ET.
Flipkart, on the other hand, reportedly recorded a surge of 153 percent to reach Rs 1,952 crore. Amazon is investing more in its India venture, including the Prime Video service. That said, Flipkart now has a more serious threat in the form of Amazon. Fortunately, the Indian company has received a new lease of life with its latest funding of a whopping $1.4 billion and acquisition of eBay India. Investors seem to believe Flipkart still has more value, and perhaps is the only one capable of tackling the Amazon challenge.
Flipkart s new momentum is being driven by investors such as Tencent, eBay, and Microsoft. Also, the company managed to get a post-transaction valuation of $11.6 billion. It s not just about the valuation and fund raising, it s more about utilizing the investment. Tencent, eBay and Microsoft bring more of a strategic expertise to Flipkart, which it currently needs to maintain its ground.
This is good news for Flipkart as it solidifies it as a market leader at least in the short term, keeping competition especially Amazon at bay. It is interesting to note that this round sees the investment from strategic investors that will bring technology and market expertise that Flipkart earnestly needs, in contrast to the previous round of mostly financial investors, Sandy Shen, Research Director, Gartner said.
Although India s e-commerce market is still at an early stage, the market is seeing signs of consolidation as scale is a key success factor in the business. Flipkart has been and will continue to make acquisitions to increase scale, and the next challenge is to strategize the path to a sustainable business model within a set time frame. Hopefully with the funding and expertise it is getting from the investors, it will be able to establish itself as a true market leader from both the technology and operational perspectives, he added. RELATED: Flipkart, Snapdeal in merger talks as competition grows in e-commerce space: Report
Flipkart needs to focus heavily on customer retention by bringing better customer experience across its verticals. One of the biggest setbacks that the Indian e-commerce companies have faced over the years is the customer service. The e-commerce companies have to focus on user experience across platforms as well as improving the customer service. If you look at Amazon, they are expanding into multiple areas, but each area they are in, they are very strong in terms of service and experience, Ashish Jhalani, eTailing India founder and angel investor, told BGR India last month.