Defying the law of perceptions that suggests Amazon has everything best, no, Amazon has everything right.
Amazon, the biggest threat counted for the Indian E-commerce giant, Flipkart and the predictions that emerge for the merger of Snapdeal and Flipkart are only due to the Amazon being the reason.
Another threat which is not in existence in the country yet but has already started worrying the E-commerce startups is Alibaba entering to the India, knowing the fact that the Chinese giant is already a stakeholder in Snapdeal.
So if there are two ‘big’ threats for Flipkart, Flipkart has bagged two ‘big’ safeguards in its pocket already. The very first acquisition of Myntra then and now, Jabong. Myntra and Jabong, both are the biggest fashion e-tailers in the country having big brands and labels listed with more importantly, the largest market share, being Myntra on top of the list.
Flipkart, the unicorn startup, has begun its journey in the year 2007 being the founders Sachin Bansal and Binny Bansal, who recently made news of swapping the top-most positions in the company. In 2015, Flipkart was valued at $15 billion and in May 2016, Morgan Stanley lowered its valuation to $9.39 billion which gave more hopes to Amazon.
On the other side, Amazon tried to make a hole in the pocket of the existing Indian E-commerce giants by vowing to invest 5 billion dollars in Amazon India stretching a line away from Flipkart. The another threat coming into play for Flipkart.
So many threats, so much of competition, drying up of investments and the fall of revenues can make any business worry. Likewise, if Amazon counts for Flipkart as a worry, we have Alibaba entering into space which might give many more reasons to Amazon to worry. What can be concluded here is the competition is no less for any business or any business giant who is doing right and trying their bit.
So if Amazon is fueling 5 billion dollars, for an instance the money turning into burned cash through discounts offered or the money escalated to grab a solid consumer base, at the end of the financial year, it is what revenues count (and user base) and the amount invested defining the charts of cash flow.
What is more important to count at this point of time-frame is Flipkart is at the situation where it needs to raise money time and again while Amazon has already built itself in the other parts of the world and now picked India to bring the heat more. But!
Flipkart has been able to grab the attention of Indian consumers and developed a strong consumer base defining itself into various categories amongst which Electronics’ goods being the favorite to choose it as the platform while the acquired firms Myntra and Jabong are scaling up in the fashion clothing league.
What was left for Flipkart has already been covered by Myntra, and the another acquisition of Jabong will bring more to its variety, valuation and revenues, and the pre-defined consumer base.
So if Flipkart is following up the business strategies right, it has left nothing to compete against the Amazon, scaling up will always be one factor though. Jabong can be counted as a loss to Amazon when the deal didn’t go in their hands previously, Amazon was interested in buying the Jabong, and majorly it would have helped to scale its fashion league. But, that didn’t happen.
Flipkart following the right theories keeping the spirits high has a focus that its competitors do not get any advantage of any kind. Wondering if Amazon had Jabong in its hands, the situation could have been slightly different, and Amazon could have brought Myntra’s conviction a challenge. But, that didn’t happen.
Arvind Singhal, Chairman of retail advisory firm Technopak, says this is a smart move by Flipkart.
“Just like its Myntra acquisition, Flipkart has ensured that competition is not able to get its hands on Jabong. This deal might not have an immediate impact on Flipkart’s turnover or valuation or fundraising. But it has ensured its competitors do not get the advantage,”
What is actually more worrying for Flipkart is the law of perceptions. Yes, it is, which exists in the innumerable minds which has to be flushed away as early as good. It comes out being a taboo. And Flipkart should be all set to kill it.
Amazon Prime managed to give another blow when Amazon is itself a sensation in the Indian market which Flipkart had done a year before with Flipkart First but many didn’t even bother about it. Why?
The major Indian consumer base has always believed that if a firm is foreign-based, it is more likely to be more reliable. It has been believed by many, and yet it is believed. The image and value of brands suffer utmost with this taboo. Likewise, Uber has been trusted more than Ola (taking both businesses’ cabs are available at the same spot at the same time), Amazon takes a leap against Flipkart on the basis of this law as well.
This should make one worry a lot. And more significantly. This is the curious case. A factor of reliability can only empower and work here.
Another is the futile discussions over the valuations and services have created a setback for the community and prevailed this mindset which is why Flipkart has to carry everything right otherwise Amazon has already everything right even if it hasn’t.
With no doubt, Flipkart has immense room for growth so does Amazon have, though the majority of Indian population belongs to the section of non-branded-no-online-fraternity or buying things from the outlets.
With more competition comes more planning and the best is yet to deliver and another best is next to it and then, the best will always be never-ending for any business and every business.
Alas, profitability is quite away from their hands but will make a way with the market growing exponentially making it large.
Content Developer. Strategist. (A true) Startup Enthusiast. A kind of a guy who relies on analysis, and writes to spoil the masks. A threat to humor, if one liners could kill. Twitter: @profylayush.