The Indian e-commerce scenario: Lull before the storm?
It has been officially declared now. The Indian e-commerce industry is bracing up for some real explosive action as two of the biggest companies flex muscles in the race for e-commerce supremacy in India. The heartening thing though is that as of now the odds are stacked heavily in favor of the champion Flipkart. The challenger is a game changer that has ruled roost in markets it has entered- Amazon. Both the companies Flipkart and Amazon are in the process of readying a war chest of private equity funding.
The last week saw the commencement of the first round of funding warfare. While Flipkart announced a funding of $1 billion form a host of global investors, Amazon top boss Jeff Bezos was quick to respond to that initial fire with an announcement of a $ 2billion outlay for expansion of operations in India.
Industry insiders say that Amazon is all geared up to announce the expansion of its product range with the addition of books and electronics, two of its most important product lines. Plus, Amazon is also set to declare a new product category.
Flipkart, the brainchild of Sachin and Binny Bansal has announced its aim to increase its sales four times in the current financial year. In fact the ambitious growth drive is just a part of a well carved out strategy to deal with the global e-commerce giant, Amazon. Flipkart had been preparing to take on Amazon for quiet some time now. In the recent years Flipkart has acquired Myntra and LetsBuy. The strength of Flipkart in this battle will be its experience with Indian consumers, suppliers and partners.
On the other hand Amazon’s $2 billion funding comes on the heels of an annual report stating a 23% surge in sales relative to last year and a $126 net loss in the last quarter. Amazon has the strength of a global brand with operations across the globe and hence global sourcing can be a trump card for it.
So when these two cash rich giants are busy fighting each other what doe sit mean for other competitors? For one, price warfare in the form of heavy discounts, loyalty coupons, free samples and cash back offers are sure to light up the marketing sky. Price warfare is just one field where the two companies are expected to lock horns.
As the “big two” of e-commerce decide to indulge in a slugfest of sorts, the battle for distribution networks also promises to hotten up. Both the companies are aiming at vastly expanding their distribution and warehousing capabilities to bolster their respective supply chains. This maneuver of the two companies may be an opportunity in disguise.
More over the heat of this duel is sure to be reflected in the recruitment drives and the participation of these two companies in placement drives of top notch business and technology schools of India. With regard to talent management Flipkart perhaps has an edge with an array of marketing executives with local managerial and technical know-how.
In the final diagnosis of the entire story of war, obvious questions on victors and losers shall emerge. As for the losers one is not sure, but Indian consumers are sure to win.