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Rediff.com  » Business » Flipkart claws back, snatches market share from Amazon

Flipkart claws back, snatches market share from Amazon

June 27, 2017 18:17 IST

Its share among top three e-commerce players grew to 57% in March 2017 from 45% in June 2016

Flipkart regained market share from rival Amazon - showing steady growth in the nine months to March 2017 - after which it raised a massive $1.4 billion at a valuation of $11.6 billion.

According to Naspers, one of the largest investors in Flipkart, the e-commerce firm’s market share, among the top three players in India, grew to around 57 per cent in March 2017, from 45 per cent in June 2016.

Part of the increase was on account of adding sales figures from Myntra and Jabong since September 2016.

“Competition has intensified in the past year, with Amazon gaining market share in the early part of the year.

Flipkart has maintained its leadership position, with recent market share trends suggesting gains,” South African Internet investor Naspers said in a statement.

The growth prompted Naspers to participate in Flipkart’s latest round of funding with an investment of $71 million, raising its total shareholding in it to 16.5 per cent.

Naspers says it is bullish on India’s e-commerce space with estimates suggesting it could hit $50 billion by 2020.

Past analyst reports had suggested that Flipkart’s market share had remained stagnant through most of 2016, while Amazon’s was growing by leaps and bounds by clawing away Snapdeal’s share of the market.

Naspers’ estimate shows that Flipkart’s market share surged by 5 per cent in just the three months from January to March.

Flipkart is now looking at strengthening its lead over Amazon by acquiring Snapdeal, a deal, which is being pushed by Japanese investor SoftBank.

While experts are split over whether the deal makes business sense for Flipkart, it seems to be driven to bring SoftBank, a long-term investor with deep pockets, onboard.

While Flipkart is showing gains, Amazon, too, says its business grew by 85 per cent in the three months that ended March 2017, when compared to the corresponding quarter last year.

In a recent interview with Business Standard, Amazon India Country Manager Amit Agarwal said that he expected India’s e-commerce market to grow by double digits for many years to come.

“The reason I think we’re still growing at this pace is customers are shopping more, Prime members are spending more, new customers continue to come to us. Amazon.com at its current scale is still growing at 30 per cent plus, and the US market is 100 times bigger than India,” said Agarwal.

Majority of the $1.4 billion Flipkart raised this year came from Tencent, eBay and Microsoft, all seen as strategic investors, essential if the company wants to battle Amazon and Alibaba.

By investing in Flipkart, SoftBank will be hedging its bets in India’s e-commerce space, as it is already the biggest shareholder in Alibaba.

India’s e-commerce market entered 2017 on a positive note, with the overall market showing healthy growth after a year of cutbacks.

The reduction in discounts being offered to customers by e-commerce players in 2016 meant slower growth, but healthy promotions by both Flipkart and Amazon in 2017 has seen a shift in customer sentiments.

Moreover, for India’s e-commerce market to hit Naspers’ $50 billion target, it will have to grow by nearly three times in the next four years.

Amazon has already indicated that investments in India are not going to slow down, Alibaba has begun pumping in money through Paytm and Flipkart is armed with a war chest of $1.4 billion.

Photograph: Abhishek N Chinnappa/Reuters

Alnoor Peermohamed in Bengaluru
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