It’s Walmart vs Amazon, till Alibaba joins in
Not too long ago, the list of ecommerce companies operating in India was long. Much longer than in many of the evolved markets around the world. Flipkart, Amazon, Snapdeal, Paytm, Myntra, Jabong, eBay and ShopClues were among the must-have names in any e-commerce pecking order. Jack Ma-led major Alibaba has been there too, not just as a top investor in Paytm but also as an online giant about to unleash a war in the promising ecommerce market.
While Ali bab a’ s direct entry into the Indian e-commerce market has remained just a buzz for several years, many other compelling names in the list have either been acquired or have lost relevance as fundraising got tough and investors started demanding return on investment. Indeed, the dream-run fuel led by marquee international investors is history, and the mainstream e-commerce business in the country is now a race between Jeff Bez os’ Amazon and-home-grown Flipkart, founded by Sachin Bansal and Binny Bans al( not related to each other ). Analysts believe the two-horse race will now be reinforced, leaving no room for a third player, with the $500- billion W al mart likely to buy a controlling stake in Flip kart. In other words, soon it will bean aggressive all-American war between W al mart and Amazon in Indian e-commerce, just like the two rivals have been fighting in the US market. In case Amazon, which has also been in discussion for picking up as take in Flip kart, buys into the Bengal u ru headquartered firm, it will bean ear monopoly situation, one that could probably be blocked by the anti-trust body—the Competition Commission of India.
Estimates suggest Flipkart holds as much as 55 per cent of the Indian ecommerce market while Amazon has cornered much of the rest. The total ecommerce pie is still very small at around $38.5 billion as of 2017. This is a tiny fraction of the Indian retail business valued at over $650 billion. The e-commerce market is expected to grow to $200 billion by 2026, according to projections. From the signals coming from the market, there’s hardly any doubt that the two companies spearheading the show would be Amazon and Walmart. At least, till Chinese biggie Alibaba decides to join the battle.
At this point, W al mart and Flip kart are believed to be in the final stages of negotiation on who keeps whats take and who ex its the poster boy of Indian ecommerce. Sources close to the developments pointed out that W al mart, which usually bet son deep discounts, is now willing to stretch its limits to buy a controlling stake in Flip kart. The Benton ville-based brick and mortar giant knows that India will be its next battlefield to take on Amazon, and Flip kart is the best route available for that. Not a surprise then that Flip kart is being value data premium, at around $18-20 billion, just months after many rounds of mark-downs in a some what depressed market. And, Walmart may pay as much as $12 billion for a majority stake in the Ben gal ur u-based company. Some have argued that it’ s an illogical price to pay for Flip kart, which has raised a little over $7 billion of funding from international investors in more than 10 years. But, the other big player, Amazon, has also made lofty commitments—an investment of $5.5 billion for the India market in less than five years.
That explains the Indian focus of big international chains, blurring the line between online and offline. As Brett Biggs, executive vice-president and chief financial officer of Walmart Stores, pointed out recently, “We plan to allocate more capital to e-commerce, technology, logistics, and allocate less to new stores….” That may even mean Walmart dropping its multi-brand retail ambition in the India market, focusing all-out on online business and its targeted competition with Amazon. Other e-commerce companies may still be around, perhaps in niche areas such as fashion, furniture and lifestyle, but they are unlikely to emerge as significant players in a market controlled by two powerful brands.