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The e-tail Tussle

The e-tail Tussle

Over the past few weeks, there has been a great deal of hype and hoopla surrounding e-commerce in the Indian market. News of national e-tailer giant Flipkart’s $1 billion fund raising and the simultaneous announcement of Amazon’s $2 billion funding for Indian operations has sent many into a tizzy. It is a path-breaking development with regard to India’s e-commerce industry which is now valued at $12 billion and expected to grow upto $43 billion by 2018. However, the e-tailer market (currently valued at 2 billion USD) is expected to grow upto $23 billion by 2018 – more percentage of growth than e-commerce. Seeing the huge potential involved in this, and with the number of internet users expected to touch at least half a billion in the next 4-5 years, many investors, businessmen, tech-giants and industries are investing a fortune in many e-tailers, e-commerce firms, exciting and promising startups etc. This is a sure good prospect of encouraging entrepreneurship among the young talent. Not only national, but also international players are now seeing India as a great prospect with regard to investment in e-tailers. There is a reason for this. By 2020, the average age of an Indian will be 29 years compared to 37 in China and 48 in Japan. Already now, more than 50% of the population is under 25 years. The youth population is surging and is definitely going to play a major role with regard to any development or decision made. That is precisely why many see this period as a “renaissance” in e-commerce in India - unleashing the new method of how shopping “is” and “will be done” in the coming years.

Coming to the topic, a big war is now being waged between the two most recognized e-tailing companies in India, Flipkart and Amazon over ruling the Indian e-commerce market. With Snapdeal’s latest $300 million investment plans, the fight is just getting heated up. Flipkart’s unique marketing launch plans for latest mobiles like MotoG, Xiaomi and potential bestseller books etc., and Amazon’s latest tie up with Microsoft over selling of its Xbox products just goes on to show how these two vie for the people’s eye with respect to offers and innovations. Not only big investors like DST Global, Naspers, PremjiInvest, Tiger Global etc. But these emerging companies also indulge in M&As (or) acquihiring as they are called now. Flipkart’s acquisition of Myntra, Mime360, WeRead, Chakpak etc., and Snapdeal’s acquisition of Doozton.com (fashion portal), Shopo.in and esportsbuy, shows how these companies are equipping themselves with the latest trends involved in area-specific online shopping.

These Indian companies give Amazon, a run for their money. Amazon also attracts investment options from Catamaran Ventures – the private investment arm of Infosys’ co-founder Narayana Murthy.

The very fact that Amazon didn’t go for acquisition plans of Flipkart, shows that they value the Indian market a lot and are not taking it lightly. They are seeing this as a new challenge to prove them in this terrain after being world leaders in e-shopping (barring the likes of Alibaba etc.). There are positives and negatives in this mass investment of money, the positives being the possibilities of expansion of infrastructure, talent pool, improved customer relationships, hire engineers and retail brains, build warehouses, expand the product line, upgrading the supply chain, tie-up with logistic developers for warehouses, investment in automation, Ad and media, the agencies will be a happy lot due to an extensive marketing etc. The negatives however are, not many of these persons who invest will survive to see the benefits of their own companies, also the repurcussions will be felt in the other industries as the cost of hiring will move up and will pose a stiff challenge to other employers in FMCG, retail and consumer etc. The customer privilege schemes by both Flipkart and Amazon- Flipkart First and Amazon Prime (though it is yet to come to Indian consumers) have their own features. While Flipkart First limits its benefits to one vendor, Amazon Prime offers a package of shows in HBO, free e-books to Kindle users etc. At present the total product list of Amazon hovers around 17m, Flipkart at 15m, Snapdeal at 5m. But with Flipkart’s boasting figures of current 22m registered users, 4m daily visits, 5m shipments a month etc., it easily captures the number 1 position in the Indian market despite Amazon’s claims of being the “fastest country to reach $1 billion sales”.

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Graduating from this, m-commerce seems to be the next big stop as popular e-shopping websites are looking to increase their mobile users and focus on improving their mobile-apps. In recent times, Flipkart’s focus on the online recharge site Paytm seems to validate this. These companies focus on small startups that specialize in mobile payments, mobile analytics, mobile marketing etc. They also focus on enhancing the customer experience in using their apps. Already, Flipkart has come up with its “Wednesday Special” offers wherein on a specified day, purchase of any product through the mobile app will help them be eligible for winning special gifts, thus luring more customers to use its mobile app. However it is a long way to go before mobile commerce can be a significant source of income as at present, out of the 800m odd mobile subscribers in the country, only 15% constitute internet users. There is still a lot of un-tapped potential with respect to the internet usage in the country whose penetration is only 19% (243m users) and out of that only 40 million and odd are online buyers. This number is sure to go up in the coming years with this emerging trend of e-commerce settling in. Hiring and recruitment will also be on the rise with industry insiders predicting that at least 50,000 people will be hired in the next 2 quarters. However it’s a question mark on the positions they will be offered. Many of them may be taken for content creation for websites, programming, warehousing and logistics and may not be paid that much. But nevertheless,its going to create a euphoria in the placement scenario for sure.

As for students and freshers, it becomes a l i p - smacking battle to see these e-tail heavyweights clashing with each other, each day over prices, offers, promotions, customer relationships etc. This sure is a case study of how something which is innovative and intelligent can become a sensation/rage over a period of time with its meticulous planning, understanding the pulse of the customer, sustained efforts etc. and can yield rich dividends.