5/9/2016

Toughbattle:CanAmazonbeatFlipkart,Snapdeal?Rediff.com

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Toughbattle:CanAmazonbeatFlipkart,Snapdeal?
May06,201612:42IST

ThestrategytheseonlinemarketplacecompaniesfollowinthenextfewmonthswilldeterminewhetherAmazongets
tobetheleaderin2017.

Image:AmazonfounderandCEOJeffBezos(left)withAmitAgarwal,Countryhead,IndiaatBengaluru.
Photograph,courtesy:Amazon

nthenext12to18months,AmericanecommercemajorAmazonhasthepotentialtobeatthetopintheIndiamarket,
executivesatthreeprominentinternationalanalystagenciestoldBusinessStandard.

However,withacaveat.IfAmazonfocusesmoreongrossmerchandisevalue(GMV)ofthegoodssoldonitsplatformthanit
hassofar,andifhomegrownrivalsFlipkartandSnapdealmovetowardsprofitability,thecurrentpeckingorderinmarket
sharehasagoodchanceofchanging,theyadd.
ThestrategytheseonlinemarketplacecompaniesfollowinthenextfewmonthswilldeterminewhetherAmazongetstobe
theleaderin2017ornot,accordingtoanexecutiveatoneofthesefirms.
KunalBahlledSnapdealhasalreadystatedthatGMVisnotametricitischasing.
RetainingandaddinghighqualityuserswouldbeSnapdeal'sgoal,Bahlhadsaidinarecentmediainterview.
AreportpublishedbyBankofAmericaMerrillLynchinMay2015hadplacedFlipkartontopofthetablewith43percent
marketshare,followedbySnapdealat30percentandAmazonat18percent.
Oneyearlater,thingshavemoved,sayanalystsbutwithoutgivingspecificfigures.
MarketshareistypicallybasedonGMVintheabsenceoftimelyrevenuefigures,postedtotheregistrarofcompanieswitha
significanttimelagandso,makingthesealmostirrelevant,explainsectortrackers.
http://www.rediff.com/business/report/specialtoughbattlecanamazonbeatflipkartsnapdeal/20160506.htm?print=true

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5/9/2016

Toughbattle:CanAmazonbeatFlipkart,Snapdeal?Rediff.com

In2015,goestheestimate,Flipkart'sGMVwasaround$10billion,Snapdeal'sat$4bnandAmazon'sat$2bn.
Oneoftheanalysts,BusinessStandardspoketoprojectedthe2017GMVat$12bnforFlipkart,$9bnforSnapdealand$6.3
bnforAmazon.
However, he added, the math could alter and Amazon could cross Snapdeal's GMV while moving closer to Flipkart or
overtakingit,dependingonhowthethreechoosetheGMVversusprofitabilityplay.
GMV has been an important metric for ecommerce entities in getting a higher valuation and attracting a next round of
fundingfrominvestors.
In the process, some companies have even inflated their GMV figures, says an analyst. However, a company such as
Amazondoesnotneedtodothis,notneedingtodependoninvestormoney.
How a company moves in certain categories will also determine the next pecking order in market share. So, reducing
emphasisonelectronicsasacategorywillhelpacompanyinattainingprofitabilityfaster,sayexperts.
AlthoughelectronicsfetchesahigherGMVthan,say,clothesandaccessoriesbecauseofthehigherpriceoftheproducts,
themarginsandthereforerevenuesaremuchlowerinthatcategory.
Againstoneoftwotothreepercentinelectronics,fashionapparelcommandsamarginof1015percent.
Also, repeat buying is very low in electronics. By shifting the focus from here, an ecommerce player will move quicker
towardsprofitability,ademandincreasinglymadebyinvestorspumpingfundsintotheinternetledbusiness.But,thatcould
alsoimplyafallintheGMVpeckingorderthatdeterminesmarketshare.
ApartfromGMVmarketshare,someothermetricsareusedbyecommercecompaniestoshowleadership.Forinstance,a
ComscoreanalysishadpeggedFlipkartontopwith50millionto100millionappdownloadsrecently,followedbySnapdeal
andAmazonat1050mn.
Another latest monthly visitor data (without taking into account mobile transactions) shows Flipkart maintaining the lead,
whilePaytmhaspickeduptraction,itislearnt.
In2014,Amazonhadcommitted$2bnfortheIndiamarket.
And,afteritsfirstquarterearningsnumbers,thegroupsaidIndiawasoneofthemostimportantmarketsforitandwould
investwhatittook.
''It'sanopenchequebook,''ishowAmazonIndiaheadAmitAgarwalhaddescribedtheinvestmentplanofthegroup.
Flipkart has raised $2.6 bn since May 2014 and Snapdeal $2 bn since the start of 2014 from marquee international
investors.
Botharelearnttobeintalkswithinvestorsforraisingmorefunds.
Earlierthisyear,MorganStanley,aninvestorinFlipkart,hadmarkeddownthevalueofitsholdingby27percentinthe
SachinBansalledcompany.
ThatbroughtdownthevaluationofFlipkartto$11bn,fromtheearlier$15bn.
Flipkart'svaluationmarkdownisseenasabenchmarkfortheentireecommercesector.
But,accordingtoreports,Flipkartcontinuedtotalktoinvestorswhilepeggingitsearliervaluationat$15bn,whileSnapdeal,
too,stucktoa$6.5bnvaluation.
Noneoftheecommercecompaniesmentionedherewouldcommentonmarketshareissues.
NiveditaMookerjiinNewDelhi
Source:

http://www.rediff.com/business/report/specialtoughbattlecanamazonbeatflipkartsnapdeal/20160506.htm?print=true

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