Amazon hits Snapdeal and Flipkart with a $3 billion bludgeon

The company has recently announced its plans to infuse another $3 billion funding in its India unit boosting the investment to around $5 billion.
Amazon India

While the eCommerce industry is done with the ‘honeymoon period’ in India, American eRetail giant Amazon is still having a retreat and expects a brighter retailing scenario in the country. The company has recently announced the plan to infuse another $3 billion funding in its India unit boosting the investment to around $5 billion. This is way more than what its peers (in India) could even think of.

This recent investment made by the Seattle-based online retailer was a vote of confidence for PM Narendra Modi who recently presented the US India Business Council’s global leadership awards to Amazon’s mastermind Jeff Bezos. Expressing his gratitude on this recognition, Bezos said that the award is a result of company’s avid operation in the country and the fact that it has created about 45,000 jobs in India. Amazon continues to see huge potential in Indian economy and will affirmatively move towards its expansion here, he added.

Amazon failed miserably in China and was not able to nab the market share away from the Chinese eCommerce giant Alibaba. Now the company has aggressively eyed Indian market, which currently stands head-to-head with other leading economies of the world. This is the reason why Amazon has injected such massive investment which is pass the combined capital raised by its Indian counterparts Snapdeal and Flipkart.

Many statistics and consumer surveys have touted Amazon as one of the most trusted eCommerce destination in India. The company has very well connected with the millennial consumers and has a rooted itself in urban as well as rural vicinities of the country. Amazon is going great guns with its calculative action plans and understanding of the complexities of the Indian market.

No doubt India is a price sensitive market and to survive here needs a lot of patience along with a ‘hell lot of cash’. Discounted deals along with better quality and an unmatched shopping experience are three of the major expectations of consumers and this is where many eCommerce companies fail. But, Amazon knows the breakeven. At a time when other online retailers are working towards safeguarding capital and focus on unit economics, Amazon is ramping up its cash burn to nab higher market share.

This is a reason worth $3 billion for Flipkart and Snapdeal to fasten up their seatbelts. The news comes at a time when these homegrown online retailers are going through a rough drive as they face barriers whether be in terms of raising new funds or getting devaluated by several investors. Within a tenure of 3 years, Amazon has touted itself as a potential contender for a kingdom that earlier belonged to Snapdeal and Flipkart.

However, Flipkart still holds the leadership position in India’s eCommerce battle but, Amazon is catching up to its level with a phenomenal speed. As per a recent report, both Amazon and Flipkart were head-to-head in terms of weekly average minutes spent by users on their apps While Amazon users spent an average 16.9 minutes, those of  Flipkart were slightly ahead by 1.1 minutes.

Amazon has been stagnant with its growth momentum during the first quarter of 2016. The company has shown a whopping 150 per cent hike in its first calendar quarter from a year earlier. It added 90,000 new products daily between January and March. Now, Amazon India has 55 million products listed on its platform while Flipkart has more than 40 million and Snapdeal has 35 million.

With Amazon’s flabbergasting blueprint for India expansion, roads for Snapdeal and Flipkart are narrowing down drastically. At a time when the eCommerce industry is predicted to be a $100 billion market by 2020, the ongoing phase is nothing but a transition time to flip the flaws upside down. The key enabler during this period will be the mechanism to not just engage consumers, but to deliver an unmatched shopping experience or else they will go somewhere else. Rising incomes, urbanisation and attitudinal shift has resulted in immense transformation of the industry and will continue pointing to a certainty of growth in future.

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