If Amazon India is adding customers at the rate of a million a month, Flipkart’s losing them even faster. In the six months to June, Amazon attracted 6 million of what are called active users on its mobile app while Flipkart lost around 8 million. Data from an app analytics firm shows the number of monthly active users on Flipkart’s app platform dropped from 91 million in January to 83 million in June while Amazon’s share rose from 58 million to 64 million. Snapdeal was also a big loser; active users fell from 38 million in January to 33 million in June.
In early June Amazon CEO Jeff Bezos wrote a $3-billion cheque for India following the online retailer’s $2-billion commitment in 2014. This was a clear indication, analysts said, of the e-commerce giant’s eagerness to consolidate its business here before Alibaba could blitzkrieg its way into the market. Bezos made the announcement at an event in Washington attended by Prime Minister Narendra Modi. “I can assure you it’s only the beginning and as we say in Amazon, it’s only day one,” Bezos had remarked at the time.
Anil Kumar, CEO of consulting firm RedSeer Consulting, recently pointed out that most e-commerce players were pruning their advertising and and marketing budgets. “Amazon has realised that this is a good time to invest and is using this opportunity to gain market share,” Kumar said.
E-retailers have been pushed on to the back foot in recent months with capital not coming in as easily as it was even a year ago. Data from Jefferies showed inflows into online businesses in the three months to June were of the order of just $528 million, the lowest in eight months. “The fund-raising in Q1FY17 was 50% less both sequentially and year-on-year, confirming a trend that has been anecdotally reported for several months now,” analysts at Jefferies wrote. The challenges are bigger for larger players looking to raise over $100 million, they believe.
While Amazon may not be short of funds, the e-commerce player is reportedly unhappy with the recent government guidelines that disallow a single vendor from contributing to more than 25% of an e-retailer’s revenues. In Amazon’s case, Cloudtail is believed to be contributing more than 25%. Earlier this year in February Amazon launched its online kirana store in Bengaluru — Amazon Now. “One of the top-level lessons is that we have done much more local market customisation in India than we did in China,” Bezos told a conference recently.
A recent article in the Harvard Business Review noted how Amazon has reinvented its ecosystem to address the challenges it has faced conducting an e-commerce enterprise in India. “Its funding and efforts are outpacing those of its competitors, including Flipkart and Snapdeal. That’s because there is a lot of stake,” the article said. A recent Google-AT Kearney study predicted online retailing in India will expand to 175 million shoppers — three times the current tally — by 2020. By that time the size of the e- commerce space is expected to cross $100 billion.
Talking to FE recently, Amazon India vice-president and country manager Amit Agarwal had observed that if things went according to plan, India could become the second largest market for the retailer outside the US. Currently, Amazon India has around 45,000 employees and 21 fulfilment centres across up 5 million cubic feet of storage space.