Amazon vs Flipkart – The Different Battle Grounds

Flipkart

Amazon and Flipkart are the biggest e-commerce companies in the country and are involved in an intense battle for the first position. Each has been trying to out do the other and create a wider margin. In this endeavour, multiple battle grounds have emerged. The first battle ground was that of the e-commerce platform. While Flipkart continues to be the biggest e-commerce platform in India, Amazon has caught up significantly giving Flipkart a run for its money.

Flipkart, including its acquisitions, witnessed a drop in their market share (by Gross Merchandise Value) from 40% in 2014-15 to 38.5% in 2016-17. Flipkart had a GMV of Rs. 37,416 crores. On the other hand, Amazon has seen its market share increase phenomenally from 12% to 29% with a GMV of Rs. 32,255 crores. The GMV of the entire e-commerce market for 2016-17 was estimated at Rs. 1,10,000 crores. Amazon seems to be catching up faster than anyone can imagine. It has the advantage of experience from several countries around the world as well as agile systems that have stood the test of time.

The e-commerce landscape is filled with multiple categories such as mobile phones, electronics, apparel, furniture, on-line grocery and food, etc. The biggest category in the e-commerce landscape is the mobiles category with a market share of 45% followed by apparel at 21% and electronics and peripherals at 18%. When one looks deeper into the various categories, one sees that Flipkart isn’t a leader in all categories. While Flipkart dominates the Mobile phones and Apparel categories with a market share of 40% and 23% respectively, Amazon dominates the electronics and peripheral category with a market share of 40%.

While the platform continues to be the main battle ground, there are others also opening up. Amazon has launched its fast delivery services of Prime coupled with its content platform. This is a significant plus when compared to Flipkart. Flipkart launched its own version called Flipkart First in 2014. However, this fizzled out over time. The company has recently relaunched this service with a fee of Rs. 500. They are planning on tying up with Gaana, Hotstar, Makemytrip, Swiggy, Ola and BookMyShow to compete with the services provided by Amazon.

This service is a huge revenue stream for e-commerce platforms. Some estimates put the number of Amazon Prime subscribers at 4 million. The nature of this service with Amazon’s commitment has changed from an optional service to something which every platform must have in order to compete and survive. Amazon’s increase in subscription fee from Rs. 499 to Rs. 999 maybe a strong signal that the number of people willing to subscribe to such a service is high and the belief that their demand is relatively inelastic. This belief will be tested by how the program fares in the coming months.

The third battle ground, and perhaps the most interesting, is that of their own line of products. Flipkart has multiple private labels such as Smartbuy for electronics and electronic accessories and MarQ for large appliances. Flipkart recently launched its another line of products called Billion. In a press release, Sachin Bansal, the Co-founder and Executive Chairman, said “Flipkart is constantly innovating to deliver the best e-commerce experience for Indian customers, which includes access to quality products at affordable prices.

Billion is our newest such innovation, offering products designed specifically for Indian shoppers. We have data-mined thousands of customer reviews to address the shortcomings of existing brands and used this knowledge to design products that address these need gaps.” The Amazon equivalent is called AmazonBasics. The difference lies in the fact that AmazonBasics has a global presence.

The third battle ground is paving way to a newer battle ground (battle ground 3.5), the fight for smart phone. Flipkart last month launched its smart phone, the Billion Capture+ priced at Rs10,999 and Rs12,999. Amazon is looking to counter this by tying up with 10.or (Tenor), owned by a Chinese firm Huaqin Technology . In a statement similar to what Bansal said in the press release, Manish Tiwary, Vice President, Amazon India said “We leverage the customer data and feedback to understand the gaps in the selection, pricing and reach out to our vendors or OEMs to manufacture relevant products”. The company has the tag line ‘Crafted for Amazon.’ As compared to Flipkart’s ‘Made for India, in India’.

This expansion into the private labels is an extremely shrewd and smart move. They are able to deliver similar products at significantly lower cost. This enables eCommerce companies to take in some of the consumer surplus that is created. As the shift focuses towards profitability, such initiatives will be of extreme importance. The numbers also point to a similar scenario. Nearly 45% of the e-commerce market is dominated by smart phones. The price point which the two giants are targeting make up nearly 20% of the market. If these companies were to get even a small portion of this market share, the take home would be significant.

This is an exciting time in the evolution of e-commerce in India. There are multiple battle grounds emerging where the battle for the prized position in the e-commerce space is taking place. Only time will tell if one (and if so, who?) will emerge as the victor, or if there will be an equilibrium between the two.

-Contributed by Bhargav Dhakappa

Picture Credits: linkedin.com



Most Popular

To Top
Please check the Pop-up.