The Indian e-commerce landscape is all set to witness a major upheaval as the e-commerce biggies are ready to lock horns, aiming for the greater chunk of the $20- billion online shopping market.
India is one of the most attractive retail markets in the world today, given its size and growth rate.
Earlier the competition was between Flipkart and Amazon, but now things are changing fast.
Walmart has entered the game.
Walmart finally wrapped up its much-awaited Flipkart acquisition for $16 billion, which makes it the world’s biggest ecommerce deal. With this buyout,Walmart will own around 77% of Flipkart.
Now Walmart is pitted against the Amazon and has intensified the battle between them in the emerging Indian e-commerce market.
Flipkart has a loyal customer base, which Walmart will have the access to.
In addition Walmart will benefit from Flipkart’s well-established e-tailing delivery system and its learning of being a category creator in India.
On the other hand, the deal will give Flipkart an instant leg up in the offline retail space and a strategic investor with great learning.
Experts believe that user choice should improve. Walmart will differentiate the merchandise given its greater range of private labels.
As of now the e-commerce penetration in India is low – at 15% of retail. Amazon has already spent $3 billion of its committed $5 billion to grow the Indian market. Flipkart is expected to diversify its inventory to attract more Indian consumer segments that still haven’t explored online shopping.
Both of them will play to their strengths and make inroads into each other’s territories.
While Amazon will strengthen the fashion and apparel segment, where Flipkart has an edge, the latter with Walmart alongside could penetrate new areas such as food, where Amazon has a huge lead.
- Out of 500 million internet users, less than 20% have shopped online, while less than 10% are regular shoppers. The user base will expand to 20 million by 2020.
- As smartphones become more affordable and mobile data becomes cheaper, online shopping is now more accessible.
- Therefore the focus is clear to get new users, which means the introduction of new categories as well.
- In the beginning, e-commerce grew with mobiles and low-value, low involvement categories such as mobile accessories. Today, with the platform maturing, the focus has shifted towards fashion, groceries, home and furniture like high involvement categories which requires customer experience.
Transforming Ecommerce Ecosystem
The Flipkart-Walmart deal is set to change the competitive landscape of Indian e-commerce. The big advantage that Amazon always had over Flipkart was the unlimited cash it could plough into the growth of its Indian business. Now with Walmart on Flipkart’s side, Flipkart can actually do the same and the battle for acquiring the next 100 million Indian online shoppers.
Also, it is a healthy sign for the Indian start-up ecosystem where exits have been hard to come by. Such transactions will also increase the confidence of many large and strategic investors eyeing Indian startups for investment.
Ultimately such investments will uplift Indian e-commerce by providing affordable and quality goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and entrepreneurs alongside.
Amazon, on one hand, is a pure e-commerce company, while Walmart is the granddaddy of retail. Both have in-depth technical and retail experience.It’s the small players which are going to suffer the most. When it comes to scaling up the operations smaller players constantly face the problems.However, this does not mean that they will be forced to exit. Many a time small players come out to be agile and open to new business models where big ones take a lot of time to adapt. Their focus should be on specialization within their domains to build up a valuable cache of users who seek differentiated retail experiences.
Above all, it is the consumer who is going to reap maximum out of this. Online shoppers should be ready for the feast as it is going to be the biggest festive season bonanza for them. Festival season is on the way which means deep discounts, offers, and great deals.
Credits: TOI,KPMG, Google AT-Kearney