Short Intoduction of "How Flipkart will Beat Amazon?"
In the competitive world of online shopping, Flipkart and Amazon are the two giants standing tall in India. Flipkart is an Indian company that only operates within India, making it a local player. On the other hand, Amazon is a global company that serves almost every country. In recent years, Flipkart has become India’s top online shopping platform. However, with Amazon’s entry, Flipkart is facing tough competition. Join us in this article, as it is like an in-depth case study exploring how Flipkart will beat Amazon in the Indian e-commerce landscape. It delves into the strategies and factors that could propel Flipkart to the top spot.
The Story of Amazon and Flipkart's Journey in India
Amazon :- Jeff Bezos started Amazon in 1994, and when it arrived in India back in 2013, it made a huge impact on the country’s online shopping scene.
Jeff Bezos, Amazon’s founder, committed around $10 billion to make Amazon a major player in India. Through this, it’s clear that they were not only to participate; they wanted to take over.
One big move was expanding Amazon Prime, a subscription service that offers fast shipping, along with access to Prime Video and Prime Music. They poured at least $1 billion every year to make this program a big deal in India, just like it is in the West.
And it worked. By 2018, Amazon had grabbed a 31.2% share of the market, right behind Flipkart.
Flipkart :- is one of India’s top success stories in the startup world. It was launched in 2007 by Sachin Bansal and Binny Bansal after they left their well-paying jobs at Amazon. Flipkart began as an online bookstore, and like Amazon, their first selling item was books. At first, Sachin and Binny even delivered orders themselves. Later, they started E-kart logistics, which has expanded over time to become one of the premier logistics companies in India.
As the years passed, Flipkart expanded its product range to cover everything from electronics to fashion and furniture, becoming a go-to destination for Indian shoppers. As of 2018, it has captured a significant market share at 31.9%, and if you include its fashion specialty sites like Myntra and Jabong, that number jumps to 38.3%.
But the real game-changer happened in 2018 when Walmart bought a significant stake in Flipkart for $16 billion. This partnership gave Flipkart the money and showed the way where Flipkart will beat Amazon.
E-Commerce Landscape in India
Before we start talking about the details, it’s essential to know the current e-commerce landscape in India.
Here are some trends and facts :-
- Market Size :- According to a report by Deloitte India, as India emerges as one of the top consumer markets in the world, the country’s online retail industry is expected to grow significantly. It is estimated to reach $325 billion by 2030, up from $70 billion in 2022. This growth is mainly because more people in smaller cities (Tier-2 and Tier-3 cities) have started shopping online. The Business-to-Consumer (B2C) e-commerce sector is anticipated to maintain steady expansion in the coming years, with an expected annual growth rate of around 8.68% from 2023 to 2027. Another report by Redseer suggests that India’s online Business-to-Business (B2B) market could reach $100 billion by 2030.
- Internet Penetration :- As of 2023, Internet usage in India has soared to new levels, with more than 918 million people using it. Interestingly, even people from rural areas are joining fast, with around 375.66 million subscribers, showing that an expanding population is getting online.
- Consumer Behavior :- Smaller cities like Tier-2, Tier-3, and beyond are now making the most online orders, showing a change in how people shop. Data reveals that the share of online shopping from Tier-3 cities increased from 34.2% in 2021 to 41.5% in 2022.
- Categories :- Online shopping is changing, with new categories becoming more popular. The fashion and accessories category dominates e-commerce, followed by beauty, electronics, home, and health products.
Amazon vs Flipkart : The Business Faceoff
Looking at Amazon and Flipkart’s businesses helps us understand their business model, revenue, investments, competitors, and other factors. Let’s figure these out:
Business Model :-
- Flipkart operates as a combination of stocked goods and a marketplace model, connecting sellers to potential customers. It follows a Business-to-Consumer (B2C) approach, offering a wide range of products across various categories.
- Amazon also operates on a marketplace model and is known for its vast selection of products.
Revenue of Amazon & Flipkart
Flipkart’s Revenue Comes From :-
- Commission fees from sellers
- Advertising and promotional services
- Logistics and supply chain services
- Its private-label products
- Subsidiaries like Myntra, PhonePe, and Flipkart Wholesale
In the financial year 2023, Flipkart reported a revenue of over 560 billion Indian rupees. Flipkart Internet, the marketplace arm of Flipkart, saw a 42% growth in operating revenue to 14,845 crore INR. The company’s earnings from offering logistical services grew by 50% to 5,789 crore INR.
Amazon’s Revenue Streams Include :-
- Commission from third-party sellers
- Subscription services like Amazon Prime
- Amazon Web Services (AWS)
- Advertising revenue
- Kindle and e-book sales
As of the financial year 2022, Amazon’s operations in India recorded a revenue of $5.56 billion (approximately 42,260 crore INR). Amazon India’s operating revenue for FY22 stood at 214.62 billion Indian rupees.
Investments & Some Major Investors
Flipkart
Flipkart’s marketplace segment, Flipkart Internet of Walmart, got about INR 722 crore (around $90 million) from its parent company in Singapore.
Flipkart has raised a total of $14.9 billion over 28 funding rounds, with the latest funding being a $600 million Secondary Market round on December 22, 2023. Some of the notable investors include:
Walmart :- A significant investor, having also invested $1.4 billion in a Secondary Market round in July 2023.
Tencent :- Participated in multiple funding rounds, including a $264 million Secondary Market round in June 2022.
SoftBank Vision Fund :- Involved in a $3.6 billion Private Equity round in July 2021.
Amazon
Amazon intends to inject an additional $15 billion into India in the next seven years, thereby increasing its total investment to $26 billion. They aim to help 10 million small businesses go digital, boost exports by $20 billion, and generate 2 million job opportunities in India by 2025.
Since Amazon is a public company, it gets a lot of support from many different investors.
Amazon’s major institutional investors include :-
Vanguard Group Inc :- Holding 771.09 million shares as of December 31, 2023.
Blackrock Inc :- With 627.17 million shares as of the same date.
State Street Corporation :- Another significant holder with 344.67 million shares.
The Competitors they both are facing
Even though Amazon and Flipkart are direct rivals in India’s online shopping world, they face stiff competition from other companies like Reliance JioMart, Snapdeal, Shopclues, and some smaller online shops that specialize in certain things. Especially, JioMart is a big challenge as it is backed by Reliance, which has a substantial presence in both digital services and regular stores.
Flipkart's Strengths and Strategies to Beat Amazon
Flipkart and Amazon are the two big players in the Indian e-commerce market, and their competition is a significant aspect of the industry. As of early 2024, Flipkart holds a 40% market share in India, while Amazon has a 31% market share. That indicates Flipkart has a strong presence in the Indian market. Not only this, but Flipkart has a substantial customer base of 180 million and growing, which has been crucial in its competition with Amazon.
Here are some specific strengths by which Flipkart will beat Amazon :-
- Homegrown Advantage :- Flipkart is a homegrown platform. One of Flipkart’s key strengths is its deep understanding of the Indian market. By customizing products and services to fit the varied needs and preferences of Indian consumers, it can be better than Amazon.
- Customer-Centric Approach :- Flipkart has always prioritized customer satisfaction by giving them a smooth shopping experience and excellent customer service. They pay attention to what Indian shoppers want, which helps them build a group of loyal customers who keep coming back to shop.
- Innovative Payment Solutions :- One of the reasons why Flipkart became a hit in India is that it introduced the first Cash on Delivery (COD) payment system in 2010. This made customers trust the website more. From then until now, Flipkart has continued to pioneer the development of payment and value solutions specifically designed for the Indian market. They offer various payment options like gift cards, personal loans, No-cost EMIs, credit cards, and Flipkart Pay Later, making shopping easier for everyone.
- Focus on Regional Preferences :- Flipkart is strategically focusing on regional preferences to serve the diverse Indian market. Due to its deep understanding of local preferences, Flipkart is successfully expanding its presence in Tier-2 and Tier-3 cities. The company also collaborated with regional YouTube influencers to reach consumers in Tier-2 cities and beyond.
- Big Billion Days Sale :- Flipkart’s annual “Big Billion Days Sale” competes directly with Amazon’s “Great Indian Festival“. The “Big Billion Days Sale” is recognized as the biggest sale in the Indian e-commerce calendar. It lasts for several days and includes products ranging from fashion to electronics.
Some specific strategies by which Flipkart will beat Amazon :-
- Logistics and Delivery :- In terms of logistics and delivery, Flipkart has a massive advantage with Ekart Logistics, its in-house fulfillment service. Ekart ensures quick and efficient delivery, even to the most distant areas of India. Having this service in-house enables better quality control, hassle-free returns, and reliable Cash on Delivery (COD) options.
- Exclusive Partnerships :- Collaborating with local businesses, retailers, and brands has been a successful strategy for Flipkart. By building strong partnerships, they can offer a wider range of products, better prices, and exclusive deals that attract and retain customers.
- Customer Loyalty Programs :- Flipkart Plus is a loyalty program of Flipkart similar to Amazon Prime. This loyalty program offers free and fast delivery and has a special feature called “Plus Coins“. You can earn these coins and then use them to get additional benefits. Flipkart Plus also offers early access to sales and promotions, ensuring loyal customers have the first chance to shop.
- Data-Driven Insights :- Flipkart leverages data analytics to understand customer behavior, preferences, and trends. The platform collects extensive data from various channels like customer feedback, search queries, product views, and purchase history. Using numerous methods, including machine learning algorithms, artificial intelligence, and statistical analysis, Flipkart carefully scrutinizes this data to uncover valuable insights and patterns.
- Rural Expansion :- Flipkart’s rural expansion involves creating jobs, empowering local artisans and businesses, providing marketplace access to rural communities, and focusing on loyalty programs. These efforts, tailored to the unique needs and preferences of rural consumers, could be key factors in Flipkart’s strategy, where Flipkart will beat Amazon.
- Competitive Pricing :- Flipkart often compares prices with Amazon and adjusts its pricing strategy accordingly. This proactive approach aims not only to attract price-sensitive customers but also to secure a larger market share. By staying vigilant about pricing dynamics and making necessary adjustments, Flipkart endeavors to remain competitive and appeal to a broader customer base, strengthening its position in the market.
Conclusion
In the battle for e-commerce dominance in India, Flipkart has a good chance of beating Amazon. They’re focusing on what customers want, working closely with local communities, teaming up with other businesses, and using technology to their advantage. It will be interesting to see how Flipkart keeps changing and coming up with new ideas to stay ahead. We’ll have to wait and see if they can really become the new number one, beating out Amazon.
Questions? Answers
Flipkart has been making strides towards profitability. In 2023, Flipkart Internet, which operates the marketplace, reported a 42% growth in operating revenue to Rs 14,845 crore, and its overall losses went down by 9% to Rs 4,026 crore. Even though Flipkart isn’t making a profit yet, these numbers are a good sign that it’s heading in the right direction. Additionally, Flipkart is in talks to raise about $1 billion in funding, with Walmart, its parent company, promising to give $600 million. This extra money could help Flipkart become profitable sooner.
Flipkart Pay Later empowers shoppers to make credit-based purchases and settle payments at a subsequent date. It eliminates the need to make immediate payments during checkout, making your shopping experience hassle-free. Once you activate, you get instant credit of up to ₹1 lakh.
In contrast, When you opt for the Flipkart EMI option, whether you pay in full or in installments, you’ll see the EMI tenure along with the associated interest rates. Flipkart exclusively provides No-cost EMI options for durations of 3, 6, 9, and 12 months. Therefore, you’re required to select one of these tenure options.
Generally, if you want to sell products on online marketplaces like Flipkart or Amazon in India, you are required to register for GST and obtain a GST Identification Number (GSTIN). But, if you are selling goods that are exempt from GST, you do not need to register for GST.
Online grocery is the top-selling category on Flipkart. Its popularity has risen significantly, particularly following the emergence of numerous online grocers. People have increasingly relied on such platforms for their daily needs, moving away from traditional grocery shopping to the convenience of online purchases.
As of the latest available information, Flipkart’s share price is ₹52,289 per share. On the other hand, the current share price of Amazon.com Inc (ticker symbol: AMZN) is approximately USD 185.99.
Kalyan Krishnamurthy is the CEO of Flipkart, and as of 2023, the company’s approximate net worth stands at $40 billion. Amazon’s CEO is Andy Jassy, and as of May 2024, Amazon’s net worth is approximately $1951.03 billion.
The city that spends the most time shopping on Amazon in India is Bengaluru.
Except Bengaluru, other notable cities with significant engagement in online shopping include Guwahati, Coimbatore, and Lucknow.
Amazon’s Fulfillment by Amazon (FBA) program offers merchants the option to house their merchandise within Amazon’s storage facilities, providing a streamlined solution for inventory management. Following that, Amazon manages the storage, packaging, and transportation of the products to customers. It additionally manages customer service and processes returns for these orders.
The first domain name registered by Amazon was relentless.com on July 5, 1994. However, it was later changed to amazon.com.
Yes, Amazon has initiated layoffs in India as part of its global restructuring process. As per the last data available, the company has confirmed that it will lay off over 18,000 employees, including many from India.
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