Ali Hasan
Introduction – Can Flipkart beat Amazon? The E-commerce battle in India is now gearing up and is getting more and more intense with each passing day but the only one can be the absolute winner. Who is it going to be?
That’s quite a big question. Homegrown brand Flipkart has now become a monster in itself (Especially after funding from Walmart) and is ready to conquer anything that stands in its path.
Their rival – oh boy, it’s Amazon. It’s a company that’s almost $1.6 trillion by market capitalization. In the USA, it’s the 3rd largest company behind Apple and Microsoft.
In the past few years, they have improved their grip on the E-commerce market in India and are only set to rise further. Now the big question – will Flipkart be able to beat Amazon? Let’s find out but first a little background about Flipkart.
Flipkart was founded on 5th September 2007 by Sachin Bansal and Binny Bansal with an initial capital of Rs 400,000. Both of the co-founders are from IIT Delhi and formerly worked for Amazon. It’s headquartered in Bangalore, India but registered in Singapore.
The company initially focused on book sales but later expanded into various segments like:-
- Consumer Electronics,
- Fashion,
- Home Essentials,
- Groceries &
- Lifestyle Products.
As of March 2017, Flipkart had a 39.5% market share of India’s E-commerce industry.
Early Days – Initially Flipkart only sold books and the delivery was done by the co-founders themselves. When the demand increased, the co-founders resigned from their jobs at Amazon and started working full time on Flipkart.
In the early days of Flipkart, the e-commerce market in India was still in its infancy stage and people preferred to buy physically rather than online.
To combat this issue, the “Cash on Delivery” feature was introduced for the very first time in India and became an instant hit. They slowly grew and by 2008, they were receiving 100 orders per day.
Marketing Strategy of Flipkart
Flipkart has used many marketing strategies that are creative, unique, and compelling. They are as follows:-
- Kidults – This is by far the best campaign used by Flipkart and my personal favorite as well. I might not buy from them very often but I simply love these ads where we see kids dressed as adults in everyday situations. These ads are creative, funny, and quite convincing where they encourage people to buy online without much worry.
- GenE – In December 2018, Flipkart launched an ad campaign to address gender inequality issues. The idea was to raise kids without any rigid gender norms and allow them to realize their full potential. It was about raising our children with a conscious parenting mind which enables them to have a lower disparity between the 2 genders.
- Big Billion Days – The most successful campaign of Flipkart to date is their Big Billion Day Sales. It’s like a black Friday sale in India where people can buy many products at huge discounts, rebates, and offers.
- VR Campaign – VR is the future and Flipkart knows it very well. Recently, they used VR in their Big Billion Day sale in 2019. They integrated VR in their app. The concept was to move the clouds and reveal a full moon and an exciting new offer. Users could do this by blowing into the microphone. This campaign went great and helped them in gaining millions of new users.
UserBase & Valuation – As of 2018, Flipkart is the largest online retailer in India, with a 31.9% market share, followed by Amazon at 31.2%, according to Forrester.
After adding the market share of its fashion specialty sites Myntra and Jabong, Flipkart controls a 38.3% market share which is quite impressive in itself.
They are adding 3 more local languages as they look to widen their foothold in smaller cities and towns across the country where fewer people speak English and Hindi. The 3 languages are:-
- Tamil,
- Telugu &
- Kannada.
Flipkart app has more than 100 million downloads on Google Play Store. Flipkart’s valuation is approximately $25 billion but if they have an IPO in 2021, this valuation can increase to $45-$50 billion.
Funding & Shareholdings – Various investors have invested in Flipkart who are as follows:-
- SoftBank
- Axis Bank
- eBay
- Accel India
- Manhattan Venture Partners
- Tiger Global Management
- DST Global
- Tencent Holdings
- Walmart
- Morgan Stanley
- Microsoft
- Vulcan Capital
- Qatar Investment Authority
Their biggest funding came from Walmart when they bought a 77% stake at the company for $16 billion.
The investment capital also includes $2 billion in new equity funding which will be used for growth while the transaction was structured so that Flipkart itself can still go public in the future.
In July 2020, Walmart invested another $560.45 million in Flipkart. With this funding round, Flipkart has raised close to $1.3 billion in 2020 alone.
Now the shareholdings are as follows:-
- Walmart – 82.3%
- Tiger Global – 4.72%
- Binny Bansal – 3.15%
- Qatar Investment Authority – 1.45%
- Accel – 1.28%
- Microsoft – 1.41%
- Tencent – 5.21%
- Others – 0.48%
Revenues & Losses – Flipkart has narrowed its net losses in the fiscal year ending 31 March 2020 and has increased its revenues at the same time.
The B2B segment of Flipkart posted a net loss of Rs 3,150 crores in 2019-20, compared with Rs 3,835 crores from the last year.
The firm’s revenue in 2019-20 was Rs 34,610 crores which was an increase of 12% from the last year. The total expenses stood at Rs 37,760 crores in 2019-20.
This included employee benefit expenses of Rs 309 crores which was increased from Rs 246 crores from last year.
Acquisitions – No. of acquisitions made by Flipkart are as follows:-
- Mime360.com
- Let us buy
- Appiterate
- MapmyIndia
- PhonePe
- Jabong for $ 70 million
- Myntra for $280 million
Future Goals – Flipkart is planning for an IPO in 2021 and has some plans for expansion. They plan to tap 50,000 MSMEs for expanding into small cities and towns.
They claim to have 100,000 MSMEs on their platform. They want to enable more and more sellers to grow digitally with the help of their platform in the future.
The Big Question – Finally we come to the big question. Can Flipkart actually beat Amazon in India and become the undisputed king of the E-commerce marketplace?
Well, this can be done but it won’t be very easy. Amazon won’t give up without a fight. Amazon is a giant company with global expansion plans and India is one country they would like to conquer and add to their portfolio.
Even though Flipkart now has Walmart on their side which means the battle will be explosive and fun to watch but it’s going to be a very close fight. Flipkart understands India better than Amazon and will certainly take advantage of their surroundings.
It would be a very interesting battle to witness. I don’t see anyone of them losing by a huge margin. I think it would be more like a match where a team loses by just 1 point.
Only time will tell what’s going to happen. Till then, enjoy the battle and keep shopping online.
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