Amazon Tops Indian E-Commerce Market In Web Traffic
Amazon (NASDAQ:AMZN) has been operating in the e-commerce market in India since 2013, and has grown impressively in the last three years. It is the third largest e-commerce platform in the country, after Flipkart and Snapdeal, in terms of Gross Merchandise Value (GMV). However, it has now overtaken these rivals in overall web traffic, including both web and mobile.
With an estimated current market size of $38 billion, e-commerce in India is expected to grow to about $120 billion by 2020, and this presents a massive growth opportunity for Amazon. [1] It currently has a market share of about 15% in terms of GMV in India, but the latest web traffic data suggests that it might be succeeding in grabbing share from its bigger rivals. Amazon’s recent announcement of an additional investment of $3 billion in India (taking its total to $5 billion) is going to further improve Amazon’s position in the market considering the recent fund crunch faced by its rivals. (see Why Amazon Is Betting Big On India)
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Indian e-retailers have been burning a lot of cash in the last few years to attract customers and gain market share. However, their ability to raise further capital has diminished, with investors demanding a clear road map towards profitability. It was recently reported that both Flipkart and Snapdeal had been unsuccessful in raising funds at their asking valuations of $15 billion and $6.5 billion, respectively. This could have been impacted by Morgan Stanley drastically lowering the value of its holding in Flipkart by 27% in February this year, valuing it at around $11 billion. ((Have Flipkart, Snapdeal hit a valuation wall?, Livemint, April 14 2016))
The recent introduction of some new rules for e-commerce companies by the Indian government, including disallowing big discounts and predatory pricing, has also shifted the industry’s focus from “lowest pricing” towards quality services including app and website experience, original vs. fake products, ease of payment, quick delivery, convenient return and refund policies. [2] This again should help Amazon, considering its capital infusion will be used to improve its services and business rather than blindly focusing on GMV and market share, which has resulted in all of them reporting big losses in the last two years.
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Notes:
- Ecommerce Landscape of India [2016], ASSOCHAM India, Feb 26 2016 [↩]
- Time to Bid Farewell to the Great E-Commerce Discount?, The Wire, March 30 2016 [↩]