Amazon & Flipkart Lock Horns for India’s Online Retail Supremacy
On Tuesday 29th July 2014 Flipkart announced that it has raised a fresh round of funding, worth 1-billion USD. It was marked by huge applause by the media and public. It was a historical moment for the company and for India’s online business. India’s biggest online retailer Flipkart raised new capital from new as well as existing investors with a goal to become the “mobile e-commerce company of the future.”
This is seen as a part of Flipkart’s aggression to scale up after Amazon’s rapid expansion in India that has heated up competition within online reatil business. Amazon has increased aggression, offering next day delivery and huge discounts on some of the product lines.
The valuation of Flipkart is a matter of speculation and has been put at $5 billion, & one news in Economic Times estimated that it could be as high as $7 billion. To create a company from Zero to a 7 billion dollar organization in a span of 7 years make Sachin & Binny most impressive business leader in the Indian Sub-continent.
Flipkart said it has 22 million registered users and handles 5 million shipments every month. Some months ago, Flipkart had announced that it was India’s first online retailer to hit $1 billion in gross merchandise value.
The fresh round of funding came from Singapore’s sovereign wealth fund, GIC, as well as existing investors including Tiger Global Management, Naspers, Accel Partners and Morgan Stanley Investment Management.
With recent infusion of billion dollars Flipkart would plan to strengthen and do exclusive deals like it did with Motorola to sell Moto G , Moto E & Moto X and sold more than 1 million handsets in last few months.
With recent exclusive launch of Xiaomi in India by Flipkart and power to sell it’s 1 lakh handsets in 39 minutes and second round of around 10,000 handsets in 5 seconds. Such deals and tie-up have made Flipkart the King of Indian online retail industry. With Snapdeal Struggling with service issues the online other strong e retailer is Amazon. E-bay also never captured the imagination of Indian subscriber.
Amazon Roars back – On 30th July 2014, Amazon announced that it will invest an additional USD 2 billion “to support its rapid growth and continue to enhance the customer and seller experience in India.”
“After our first year in business, the response from customers and small and medium-sized businesses in India has far surpassed our expectations,” said Jeff Bezos, founder and CEO of Amazon.com in a press statement.
“We see huge potential in the Indian economy and for the growth of e-commerce in India. With this additional investment of USD 2 billion, our team can continue to think big, innovate, and raise the bar for customers in India.”
Flipkart, Amazon’s biggest competition in India, was founded in 2007 by two former Amazon employees Sachin & Binny Bansal and they after acquisition of Myntra another key online retailer increased size and diversification in the Indian market.
Amazon, which entered India last June, has taken on rivals by slashing prices, addition of new product categories and using laser focused advertisement campaigns. “At current scale and growth rates, India is on track to be our highest growth country ever to 1 billion dollars in gross sales,” said Bezos.
The Indian e-commerce market was worth USD 4 billion in 2013, excluding online travel industry the Online sales of retail products tottaled to USD 1.59 billion dollar in 2013, expected to reach USD 76 billion by 2021. By comparison, China’s business and consumer e-commerce sales can cross USD 180 billion in 2015.
Flipkart offers 15 million products across over 70 categories The company’s founders told the media on Tuesday that they want to be India’s first $100-billion company in five years. Watch out for the IPO for Flipkart whenever it happens, it will one of the most sought after IPO’s of an Internet company to ever happen in India.
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