And the nightmares that India’s first-ever unicorn wished would never come to life are now coming true and might leave scars unmendable by any medicine. According to a LiveMint report, Flipkart is very close to losing its status at the top Indian e-commerce player to its arch-rival and role model Amazon.
In what can be said to be an unforeseen outcome, Amazon’s India operations have likely exceeded Flipkart in terms of gross sales in the month of July. And if this report is true, then Amazon has managed to achieve this feat within three years of its inception in the country.
According to five anonymous people familiar with the companies’ numbers, Flipkart reported gross sales or gross merchandise vale(GMV) of less than $300 million, while Amazon managed to bump up its sales and cross the $300 million mark in the previous month.
To those unfamiliar with the basics, Gross Merchandise Value is a term used in online retailing to refer to the value of goods sold on a particular website over a period of time, and no, it is not net revenue. Due to Indian regulations, online e-commerce retailers are setup as marketplaces whose net revenue comprises of the commissions they charge from the third-party sellers.
To further stress our point, the aforementioned numbers are only for the month of July and doesn’t exactly conclude the e-commerce battle in India. Also, Flipkart’s numbers quoted by the sources doesn’t include the revenue at Myntra and Jabong, two of the biggest fashion marketplaces it now owns.
Flipkart is still in the lead if you look at the overall scenario(including the fashion stores), but this miniscule(or big) figure is enough to shake the former’s morale. But,it also gives the Bansal’s a closer overview of the market scenario and how they need to buckle up to continue the fight against the Western e-commerce giant.
Commenting on the same in an e-mail statement, a Flipkart spokesperson said,
We continue to have a significant lead over the competition on all important customer parameters including sales. We are also the market leader in the biggest categories of e-commerce including mobiles, fashion, home, electronics and appliances.
Our sales are witnessing a steady growth and in the recent months, we have significantly raised the bar of execution, speed of customer delivery and product quality.
The important question to ask here is whether Amazon will be able to accelerate growth and continue to top Flipkart’s sales figures in the coming months. The whole scenario will gain more clarity after the upcoming festive season sales in October/November.
This festive season is key for the (future of the) e-commerce industry. If Amazon keeps up the momentum, then it will be very difficult for Flipkart to keep pace with them. But if Flipkart has a great BBD (Big Billion Day), there’s hope that Amazon won’t run away with it,
added one of the sources.
As reports suggested, instead of previous probes, Flipkart is going forward with its annual blockbuster Big Billion Day sale event. It has been bulking up resources for the past couple months and is ready to introduce some major changes to the same. Firstly, the team is mulling over the decision to spread out the sale over a period of two to three days and introduce a ‘buy-now pay-later‘ scheme for customers, by arranging pre-approved loans with help from lenders. It will also be working on streamlining operations in addition to the recent beautification of its desktop platform.
With funds in excess of $3 billion, thanks to Bezos’ belief in the Indian e-commerce ecosystem and the expectations to achieve here what they couldn’t in China, Amazon is ready to shakeout the other players in the market. If the American giant continues to sustain its spending and market share gains, analysts believe that it could be bring about some sort of consolidation among Indian players, specially Flipkart, Snapdeal, Paytm, and others. But, Paytm and Snapdeal could survive the blow and perk up their investment blanket provided by the gracious Jack Ma(Alibaba).
Flipkart, as we’ve been incessantly saying, is caught in a high-tide of valuation markdowns, top-tier management changes, slowdown in growth and the scarcity of funds. The company is now, however, gaining some momentum as it has seen some investment firms mark up its valuation and add to the potential of the business. It shows that Flipkart isn’t quite dead yet, but a funding round is much needed to sustain operations and continue to exist in the Indian ecosystem.