In the critical times, when you are only left with a choice to either turn your back and run away or face the competition, Flipkart chose to do the latter in the year 2017-18 and managed to protect its territory and even gain some fresh ground against Amazon.
As per the data revealed by the advisory firm RedSeer Consulting, the overall e-tail industry has reached $17.8 billion in size and is even expected to grow further at 60 percent this calendar year. Ujjwal Chaudhary, the Engagement Manager of RedSeer says that Flipkart accounts for 40% of this sale and Amazon lags behind by just 5%. If the sale percentage of Jabong and Myntra are to be considered, then Flipkart accounts for 45%. Flipkart has not yet announced or filed this year’s fiscal revenue details. The Fiscal year filing made by Flipkart in the year 2016-17 reveals that the company has successfully tightened its belt. A loss of 68% has been revealed by the financials and a major chunk of this loss is attributed to the slash in company’s valuation. If this is not considered, then the losses have increased by only 2.4%. On the other way, revenues went up by 29% to Rs 19,854 crore.
This serves as an important aspect as the industry grew overall by just 12% in the year 2016. However, the company grew much faster than the overall industry in a bad year. 2016 was
probably a bad year for Flipkart since it was unable to raise funds, saw top management changes, and even witnessed Amazon taking away its market share. The company (Flipkart) however took a turnaround in late 2016 during the festive seasonsales.
At the start of 2017, Kalyan Krishnamurthy, who ran the Big Billion Days sales in 2016 took over as the CEO with an aim to bring the company back to its old aggressive days. Since then, the company has managed to stand raw and firm in the market.
K Ganesh, a serial entrepreneur, and investor in companies including Big Basket that ‘The way with which Flipkart has executed its operations and gave a tough competition to Amazon is commendable. There has been a phenomenal growth and the company has held on to a great market share in the competitive industry.
As said by a Flipkart’s spokesperson, ‘On all counts, 2017 has been a watershed year for Flipkart. On one aspect we have not just managed to stick to our position of being India’s leading e-commerce market but also the aspect in which we showed a head held high and faced the competition and finally made them irrelevant on several bases’. The company has managed to stay miles ahead of every e-commerce marketplace in India today in terms of scale, the pace of innovation, reach, and customer focus. In various other categories including fashion, mobile, and large appliances Flipkart stands as the unquestioned leader holding a large share in the market.
Homegrown e-commerce major Flipkart has been ahead of Seattle based e-commerce giant Amazon owing to the turnover from its Fashion Segment. Amazon has been trying to overtake Flipkart to become country’s top online retailer through various Amazon offers and sales targeting the Indian audience. However, Flipkart still rules the Indian markets in spite of the losses suffered by the company in the last few years.
According to a report published by Forrester, Flipkart’s total share in the market went up to 39.5% from the individual 32% after acquiring Jabong and Myntra while Jeff Bezos led Amazon has 31% share despite having a global presence. The Paytm Mall supported by Alibaba Group comes third with 5.6% share.
Satish Meena, a senior forecast analyst at Forrester stated that Flipkart supported by SoftBank Group has strengthened its position in the Indian market after owning the online fashion retailers Myntra and Jabong and consequently got an edge over Amazon. To stay ahead in the race Amazon has to up its game by introducing more fashion items to attract customers.
The urban lifestyle and rising incomes of young Indians, coupled with increased smartphone usage has led to the booming of online shopping, resulting in cut-throat competition among the online retailers. The general trend for online shopping by Indian customers, both from metros and smaller towns have been dominated by fashion items, clothing and lifestyle items.
Amazon failed to acquire Jabong, leading to Flipkart’s gain. Currently, Flipkart’s share in fashion along with its acquisitions Jabong and Myntra is almost thrice than that of Amazon’s although Amazon Fashion Store attracts the second highest number of fresh customers in the country. Flipkart seems to have done its research and always come up with exciting Flipkart offers and sales to provide the buyers exactly what they want. To quote Arvind Singhal, chairman and managing director at retail consultancy Technopak Advisors, “Now they can’t think of any other company they can acquire with significant traction. They have to build up the category slowly and steadily.”
However, Flipkart dismissed the report by Forrester. Flipkart spokesperson on behalf of the company claimed it is “incorrect” and “do not reflect ground realities”. The company claimed that it retains 60% share in the market owing to its earnings not only from fashion, electronics, appliances and smartphones but also from household items.
But Forrester insisted that though Flipkart has a head start in the smartphone, apparels and fashion accessories, Amazon is considerably ahead in grocery, electronics and household goods. According to its data, 55% of the market share is retained by Flipkart Fashion and 47% by its Smartphones department, while Amazon has 17% share in Fashion category and 39.5% share in Smartphones category.
Flipkart raised a cumulative amount of $4 billion from SoftBank Vision Fund, E-bay, Microsoft Corp and Tencent Holdings previous year. Amazon is preparing to improve their position in India by promising to invest $5 billion. Flipkart is also warming up to the challenge by pairing up with Walmart Inc. and sigh a $7 billion deal.
E-Commerce Industry in India
The growth of India’s Online Market is facing a downward slope. From 100% growth in 2014 and 2015, it has come down to 39% in 2016 and an even lower 26.4% in 2017. The change in shopping habits can be contributed to the new FDI rules applied for e-commerce, demonetization and implementation of GST.
Forrester projects the growth of Indian e-commerce industry as 29.2% each year crossing $73 billion in 2022.
40% of the sales will continue to be dominated by smartphones as reported since 2017 and fashion being in the second position as 18%.
Flipkart including Jabong and Myntra tops the race with 39.5% market share, Amazon closely following with 31% share, the third position is occupied by Paytm with 5.6% followed by Snapdeal with 2.5% and Shopclues with 2.1% share.