The Amazon vs Flipkart battle in India is so ‘red hot’ right now that neither of the top two e-commerce players in the fast growing India market is willing to yield an inch.
Amazon was late to the Indian e-commerce party, entering the country nearly six years after Flipkart, founded by ex-Amazon employees Sachin Bansal and Binny Bansal, rolled out its operations. Despite being late, however, the company had a boatload of expertise under its belt, a tremendous technology advantage and immense monetary fire power.
All of these assets helped Amazon close the gap with its rival in the Indian market, and it looks like they have nearly done that.
WSJ reported last year that Bezos asked his team in India to “Do what it takes to succeed and don’t worry about the cost”. In a way, he kept his word. Amazon pumped more than 5 billion dollars into the Indian market, and it looks like India might even see Amazon’s brick and mortar stores soon, if reports are true.
The Amazon chiefsaid that his “team in India is inventing at a torrid pace, and we’re very grateful to our Indian customers for their welcoming response.”
While that’s great news for the Indian e-commerce market, Flipkart is now caught in a quandary of its own. The rumored acquisition of Snapdeal for $1 billion could be a smart move, but not necessarily for itself. The reason it will be an astute move is because it will bring SoftBank as a stakeholder. SoftBank was one of the early backers of Chinese e-commerce giant Alibaba.
But there are worries that buying Snapdeal will put undue pressure on Flipkart’s management, which needs to focus completely on tackling the Amazon problem – now more than ever. With their recent $1.4 billion round of funding, they certainly have the cash for it, but do they have the appetite, the capacity or even the need for it?
As it stands, the eBay India acquisition is already something of a challenge for Flipkart. Do they need more trouble in the form of a flagging Snapdeal business, the sales of which have fallen to INR400 crore (approx. $62 million)? Operationally speaking, it hardly makes sense for them to take on that additional load, even though there are bigger considerations.
Meanwhile, Amazon’s razor-like focus on India could quickly take them beyond Flipkart’s reach, and that’s the biggest fear that a potential Snapdeal acquisition holds for the Indian e-commerce giant. Moreover, if the US retailer’s move into the physical space happens sooner rather than later, it could be game over for Flipkart at the Number One spot, with no option for a re-match.
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