Few Indians had ever bought anything other than airline tickets over the internet when Flipkart, an Amazon-inspired online bookstore, was launched in 2007.
Flipkart might have hoped its early-mover advantage would help it build an impregnable position in India’s e-retail market, like China’s Alibaba, which accounts for more than 80 per cent of e-commerce in its home market.
Instead, Flipkart – with 22 million registered users and selling items from apparel to electronics – is defending its turf from aggressive rivals, the Financial Times reported.
These include Amazon and local challenger Snapdeal, both of which are vying for position in an industry that observers say is poised to boom in the coming years.
Flipkart last month said it had raised US$1 billion in new equity for expansion. A day later, Amazon, which launched in India a year ago, said it is increasing its bet on growth in the country, and had found another US$2 billion to invest.
Analysts believe it is only a matter of time before Snapdeal, backed by eBay, also raises funds to remain competitive.
“Everyone is getting more aggressive in defending and growing their market share,” says Pragya Singh, a vice-president at Technopak, a New Delhi-based retail consultancy. “Everybody realises the potential this market has.”
Alibaba is an inspiration to both Flipkart and Snapdeal. Flipkart says India too can create a US$100 billion e-commerce company – a role it aspires to fill – while Snapdeal’s co-founder, Kunal Bahl, has described his venture as “identical” to the Chinese group.
But retail analysts suggest no single company will establish such a dominant position in Indian e-commerce. “It’s going to be a multi-player tussle,” says Harminder Sahni, managing director of Wazir Associates, a consumer consultancy.
“India is the last big market, and none of these players will give up. They are all going to want a share of this pie.”
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