Making Sense Of Round One In The eCommerce War During The Festive Sales Season In India

Satish Meena

The first week of October witnessed the start of the holiday sales season in India as the big three online retailers — Flipkart, Amazon, and Snapdeal — launched high-profile sales. Originally started by Flipkart in 2014 as Big Billions day, this week witnessed a discount-driven war among the top three players.

Online retail in India has witnessed significant growth during the past five years, powered by highly funded online retail companies that bought growth through discounts. This gross market value (GMV)-led growth led to very high valuations and burn rates for retailers, leading some investors to question their long-term profitability. This has led to a slowdown in funding as well as cost cutting by online retailers in the past six months. Before the start of the festive season, Flipkart was looking to maintain its market share; Amazon was looking to take market share from Flipkart, Snapdeal, and smaller players; and Snapdeal was looking to find a place in the changing dynamics of India’s online retail market. 

Here are some of the key lessons from this festive sales season for the key players in the online retail market in India.

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Amazon Has Surpassed Flipkart As Indian Consumers’ Preferred Online Retail Destination

Satish Meena

According to data from Forrester’s Consumer Technographics® Asia Pacific Online Benchmark Survey, 2016, in the past three months Amazon has, for the first time since 2014, surpassed Flipkart as the preferred online retail destination for consumers in India’s metropolitan areas. Amazon’s takeover has been rapid: 30% of respondents in our 2014 survey reported buying from Amazon; this year, 76% said they did. Compare this with Flipkart’s essentially flat growth: from 63% in 2014 to 68% in 2016. Snapdeal remains far behind both Amazon and Flipkart.

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Indian mCommerce Will Reach $19 Billion By 2019

Satish Meena

India’s online retail market is on the radar of global investors and eCommerce players, which have announced investments topping $3.6 billion in the past three months, including $2 billion in Amazon, $1 billion in Flipkart, and potentially $650 million in Snapdeal. Growth in India’s online retail market is powered by its fast-growing smartphone penetration, as customers are increasingly using their mobile phones to buy products online. More than half of Snapdeal’s and Flipkart’s sales and nearly 35% of

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Big Billion Day Exposes The Opportunities And Weaknesses Of eCommerce In India

Satish Meena

October 6, 2014 — “Big Billion Day” — was marketed by Flipkart extensively, both online and offline. The founders of Flipkart, Sachin and Binny Bansal, sent a personalized email to registered users announcing the date and mentioning their emotional connection with the number 610 (the number of the apartment from which they launched Flipkart in 2007). October 6 falls in the festive season of Diwali, a period that accounts for 40% of the total sales of key brands in India. Online and offline retailers are competing for a major share of sales during this year’s Diwali.

2014 was a year of massive eCommerce investment in India. Flipkart raised $1 billion; Amazon announced it would invest $2 billion in its Indian subsidiary; and Snapdeal raised $234 million from private equity firms and an undisclosed additional sum from private investors. These three players are spending approximately 2 billion rupees ($33 million) this season on marketing — and a lot more on improving last-mile delivery and adding fulfillment centers to get a bigger piece of the sales pie.

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