Amazon-vs-Flipkart-vs-Alibaba-vs-Snapdeal-vs-Rakuten – Who will win the Indian market?

The world’s largest ecommerce company Amazon’s consistent march towards leadership in India, the imminent entry of its Chinese rival Alibaba and the silent ambitions of Japanese company Rakuten will trigger a complete overhaul of the Indian ecommerce industry, say industry experts. The ambitions of these ecommerce giants will have a direct bearing on home-grown players such as Flipkart and Snapdeal with some predicting that the two Indian players might have to bow out in the unavoidable contest.

“Ecommerce business is globally tuned towards one person winning. Indian market will get there too,” said Punit Soni, former chief product officer of Flipkart who quit down the company last month.

“Do I think Flipkart is guaranteed to be the winner, not necessarily; it will have to fight for it. However, it is the best technologically equipped Indian company, it has the largest market share and infrastructure, so it has all the pieces to be the winner. But, Flipkart has not won it yet, Flipkart will have to execute…if it doesn’t, then somebody else will,” he added.

Flipkart stands strong today but Amazon India is close at its heels. Citing comScore data four months ago, the Indian arm of the US-based e-tailer claimed to have overtaken Flipkart as the most visited ecommerce site in India. This week, Amazon India managing director Amit Agarwal told The Economic Times that the company’s shipment in India grew three to four times in the past one year. Earlier, citing data from an unnamed logistics company that services online retailers, the newspaper had reported that the market share of Flipkart and Snapdeal fell to 37% and 15% from 43% and 19%, respectively while Amazon’s market share grew 21%-24% from 14% a year ago.

“Amazon is picking up momentum steadily and in the next 12 months, it could become the number one player in the Indian market,” said Arvind Singhal, chairman and managing director of Technopak, the research and consultancy firm focussing on retail, consumer products and e-commerce. Singhal argues that once Amazon claims the leadership in the market, it will prompt Alibaba to begin its journey in India by acquiring one of the home-grown players.

“Alibaba is likely to make its presence felt in the Indian market with an acquisition. Flipkart and Snapdeal are the most likely targets. The challenge lies in agreeing upon their valuations,” he said adding that it will be logical for Alibaba to acquire Snapdeal in which it already has a stake. Alibaba’s growing ambition about the Indian market is evident from the two large bets it has already placed. It is the largest investor in Paytm and has a significant stake in Snapdeal.

According to Ashish Jhalani, founder of ecommerce research firm Etailing India, the competition will get tougher for the home-grown firms when Alibaba and Rakuten enter the market. “Amazon has managed to capture a sizeable share in most markets except for one. Its years of experience, proven technology and processes allow it to quickly scale its operations whichever market it enters. In India, it also realised the need for adopting localization and is now one of the leaders,” he said, adding that with Alibaba and Rakuten also looking to enter India, competition will only intensify for home-grown players.”

Rakuten set up an R&D centre in Bangalore two years ago and has intentions to expand in the market.

Singhal and Jhalani say the Indian market is poised for consolidation and it may turn out to be a good or a bad development for the local players depending on the way their investors and promoters look at it.

Competition from global players, who are also potential acquirers, is not the only challenge for Indian ecommerce players. According to Singhal, one has to watch for the ecommerce plans of big industrial groups such as Tatas, Reliance and Birla, too. For instance, Tata is planning an ecommerce market place under the name Unistore and Reliance is planning to launch one on its 4G Jio platform. “We can only wait and watch the nature of these ventures, we are not sure if they are going to be marketplaces or merchandize channels or omni-channels to sell their own products,” he said.

Also, there is a rethink on the potential of the market. Some including Jhalani argue Indian ecommerce market could grow to $120 billion by 2020 and can eventually surpass the US and China provided challenges in terms of telecommunication and logistics infrastructure are resolved. Singhal is of the opinion that some of the Indian players are dreaming unrealistic numbers. In terms of GDP, IMF ranked India 9th at $2 trillion while US and China, at $17.4 trillion and $10.4 trillion, respectively, are the largest economies. Besides the size of the markets and their potential to grow, another factor that will dictate the changes in the ecommerce industry is the strategies of individual players. According to him, Amazon is working on a 10-year plan to steadily establish its leadership in the Indian market. And Chinese are, anyway, known to work on long-term strategies. If not on other counts, Indian companies are likely to lose out to these players only because of their short-term vision for their businesses.

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