The last few months have been nothing short of a roller coaster ride for the e-commerce industry in India. Flipkart, India’s home grown company recently raised 1 billion dollars from global investors. Not even a day had gone by that Amazon’s Jeff Bezos announced 2 billion dollars funding support to expand Amazon India’s operations.
Flipkart needed the treasure chest in its arsenal to expand its logistics and warehousing functions in the country. Amazon with its large investor funds and growth potential has been trying to emerge the number one player in the e-tailing sector in India. The war between Flipkart and Amazon brings further questions of viability of other online players in the industry as they lack such major funding. The only company that can compete with these giants is Snapdeal. Snapdeal’s major strength lies in its large base of sellers and warehousing functions.
There have been some unconfirmed reports that Ratan Tata, the chairman Emeritus of the Tata conglomerate may become a minority investor in Snapdeal so as to be a part of the booming Indian ecommerce sector. All these developments have resulted in questions about the existence and profit potential of brick and mortar retailers.
The funding raised will mostly be deployed to expand the categories of products, increase the number of sellers and warehouses in the country. This is necessary to combat rivals companies’ tactics of one day deliveries and discount wars, that has consumers across the country rejoicing. The biggest winner in the battle yet is the online customer. From great deals, to express deliveries the companies have left no stone unturned to attract consumers to their shop.
However with this cash influx, Flipkart’s headaches are far from over. They will have to rapidly develop their supply chain, while reducing costs and build customer loyalty that jumps ship during every discount/sale event. Also, the recent push by its investors to merge with Myntra, a premium apparel e-tailing competitor seems like a good move to tackle Amazon.
Amazon has its fair share of obstacles too. It has yet to show a profit and investors at Wall Street aren’t pleased. Also, with the issues it faced in China, and the entrance of AliBaba in the US markets, has resulted in Amazon setting its sights on India. It is clearly indicated that Amazon is in this race for the long run and is ready to forgo short term profits to emerge as the largest market share holder in India.
However, both companies are hopeful that they will present growth this year in the double digits. Their top executives believe that the battle has just begun and we will have to see who will emerge on top.