Sangeetha Chengappa The Walmart-Flipkart deal makes for one of the biggest shake-ups in the fledgling Indian e-commerce industry.
The coming years are likely to see the three global retail giants — Amazon, Walmart (Flipkart) and Alibaba (Paytm) — dominating the industry.
In the near term, horizontal players like Snapdeal, ShopClues and Infibeam will continue to face an uphill task trying to raise funds — and even survive — as the cash-rich Big Three aggressively compete for India’s 90 million active online customer base.
In the long term, the foundation is set for further consolidation with the acquisition of niche e-commerce companies in the beauty/cosmetics, groceries, fashion and furniture spaces. This will allow the Big Three to gain dominant market share in newer specialised segments.
“The new Walmart-Flipkart alliance will give no space to the smaller horizontal players like Snapdeal and ShopClues in the next few years. However, specialised players like Nykaa in the beauty/cosmetics vertical, and Pepperfry and UrbanLadder in the furniture vertical will have a longer runway to spruce up their game, as Amazon, Walmart and Alibaba will have a lot more on their plate to consolidate before they look at acquiring these niche players,” Anil Kumar, founder and CEO of RedSeer Consulting, told BusinessLine .
Market growth
Massive spending by the Big Three will lead to rapid growth in the market, said Kumar. “The e-commerce market will grow at 30 per cent in calendar year 2018 to hit $72 billion, up from $55 billion in 2017. Annualised GMV (gross revenue) has increased to $17.7 billion in the January-March quarter, against $14.7 billion in the previous-year period, fuelled largely by Flipkart and Amazon and this will increase further in the April-June quarter,” he added.
Sketching out the competitive landscape that will emerge, Sanchit Vir Gogia, Chief Analyst, Greyhound Research, said Flipkart’s biggest competition is from Amazon, Paytm Mall, TataCliq, Shopclues etc. “While Amazon will be the most closely impacted, we cannot discount the impact on Paytm Mall and its key investor Alibaba.
Alibaba has been on an acquisition spree and recently took control of Ele.me, marking its foray into logistics and brick-and-mortar assets. Only yesterday, they acquired Rocket Internet’s online retail company, Daraz. These acquisitions go to show their laser-sharp focus on building assets and capabilities to put up a serious fight against Walmart and Amazon.”
Online grocer BigBasket, which raised $300 million from Alibaba earlier this year, is reported to be in talks to raise a similar amount again to counter the threat from Amazon and Walmart.
Online shoppers will have access to some of the best products on Flipkart, which entered the cross-border retail market a year ago with its eBay India acquisition. Flipkart will now be able to boost its global products selection with Walmart’s private label merchandise.
Advantage customer
Shoppers already have access to Amazon’s global product range. Also, Myntra and Paytm Mall are already offering global selections from brands like Jennifer Lopez and Jones New York, which do not have an offline retail presence in India.
Shoppers can expect better deals and discounts more often through the year with speedier deliveries, as the Big Three step up spend on new customer acquisition and investments in supply chain and logistics infrastructure.
Amazon has just infused fresh capital of ₹2,600 crore in its India marketplace (as per filings made with the Corporate Affairs Ministry), which the e-tailer will use to expand fulfilment infrastructure and to enhance consumer and seller experience.