Though the concept of e-commerce or online shopping was an alien idea in India for a very long time until the IT and ITES sectors matured, the tech-savvy Indian consumers are turning towards online shopping in good numbers due to the spread of service by providers like Flipkart, Amazon (AMZN, Financial) and Snapdeal to name a few.
Yet the facility is used by only 15% of the massive Indian population, which leaves a huge consumer band yet to be tapped. This potential has caught the attention not only of indigenous innovators and entrepreneurs but also the global big wigs like Amazon, Ebay (EBAY, Financial) and Alibaba (BABA, Financial). Let us take a closer look at the ongoing clash of the titans in this sector– the indigenous Flipkart against the global hero Amazon.
Flipkart reckoner
Flipkart is an Indian e-commerce giant started in 2007, by Sachin Bansal and Binny Bansal. It operates exclusively in India, where it is stationed in Bangalore, Karnataka. It is registered in Singapore, and owned by a Singapore-based holding company. According to Alexa Internet, Flipkart's website is one of the 10 most visited websites in India. Flipkart has launched its own product range under the name "DigiFlip," offering camera bags, pen-drives, headphones, computer accessories, etc.
Flipkart founders were both alumni of the premier technical institute of India: the Indian Institute of Technology, Delhi. They had been working for Amazon.com prior to this business venture. The business was formally incorporated as a company in October 2008 as Flipkart Online Services Pvt. Ltd. During its initial years, Flipkart focused only on books, and soon as it expanded, it started offering products like electronic goods, air conditioners, air coolers, stationery supplies, lifestyle products and e-books. Today, it is the largest e-commerce company on the Indian soil, holding the largest portion of market share in the subcontinent.
Amazon reckoner
The world’s largest e-commerce player needs no introduction as its name is significant in the concept of e-commerce. Amazon has ruled the roost in the e-commerce world across the globe, and now has pegged itself in the subcontinent to capitalize the huge potential of the country for e-commerce and take advantage of the population demography that is essentially moving into the tech savvy youth clan. It would not be wrong to say that Amazon's greatest competitor in India was birthed from Amazon's legacy, since the founders of Flipkart hail from the Amazon protégée.
Jeff Bezos incorporated Amazon on July 5, 1994 and the site went online as Amazon.com in 1995. Amazon has separate retail websites for United States, United Kingdom, France, Canada, Germany, Italy, Spain, Australia, Brazil, Japan, China, India and Mexico, with sites for Sri Lanka and South East Asian countries coming soon. Amazon also offers international shipping to certain other countries for some of its products.
Amazon locks horn with Flipkart
With the holiday season knocking at the door, retailers worldwide and in India have stepped on the gas to attract as many consumers as possible. The online retailers have started their own marketing to lure consumers with wide range of products, heavy discounts, single day delivery promises, buy-one-get-one free and all such offers that can be thought of. However, not all what is promised is delivered in the way they seem to happen.
Last Sunday, when Jeff Bezos was on his round in India to bolster the progress of Amazon India, he saw that Flipkart had put up huge billboards at the airport, highways and close to Amazon's Indian headquarters for its festive season sale campaign called ‘Big Billion Day.’
However on the big day, it turned out to be a big blunder. Flipkart's infrastructure crumpled on the Big Billion Day with products vanishing from the cart, rampant order cancellations and system failure leading to the reality falling short by several miles of what was claimed in the promotional ads. Finally, Flipkart's founders issued a public apology for their failure to meet the stated commitments. But during this Flipkart fiasco, Amazon stole the show as customers moved away from Flipkart and landed in the Amazon basket, and with the kind of dominance that Amazon holds in the ecommerce sector, it steered the Indian fanfare for online shopping from Flipkart to its own cart. The Flipkart shame game gave Amazon the required publicity without having to spend, since whenever Flipkart was featured for its failure in a media channel, Amazon was mentioned to be its closest competitor.
To add to Flipkart's woes, conventional retailers and certain consumer durable manufacturers are contemplating legal options against the online retailer for selling products under cost price and for denting their market share, while others are threatening to alienate themselves from Flipkart. Judging on the marketing cost of the online retailers, Flipkart spent the most on the ad campaign for the festive season, but could not capitalize on the customer flow due to gross infrastructure failure.
Now comes the other important part of business combat: the war of product range for its customers. Companies generally add to their product line by pairing up with related companies or acquiring companies providing different product collections. Flipkart did the same thing by roping in Myntra.com, one of the apparel online retail giants in India. This has converted Flipkart from being a primary online trader for white goods into an all-rounder champion of the online retailing arena. But close to its alliance with Myntra, Amazon dropped the acquisition bombshell on it by announcing its plans to acquire Jabong.com, the leading online fashion retailer of India. Now should we call this a master stroke from the ecommerce veteran, Amazon?
The final upper hand
Whatever might be the case, one thing that's certain is that the war is not yet over. There is lot of muscle show happening on the online turf between Amazon and Flipkart, and it is hard to say who will make it to the number one stand in India. Though Flipkart has its own lineup of patrons, Amazon is the shark of this sector. So, it would be an uphill task for Flipkart to topple Amazon, even though India is the former’s home turf. A lot of steam is still left in both the honchos, and one outcome is sure that the customer will hold the last laugh.
