What started as a buzz and turned into intense speculation in the Indian ecommerce market has finally culminated with Flipkart, India’s largest online retailer, buying its competitor Myntra in a USD 330 million deal. This is the biggest deal in the ecommerce sector in India thus far.
In the meanwhile, Snapdeal, a key online retailer in India and a Flipkart rival has received further funding of USD 100 million from its investors – Singapore-based Temasek Holdings and BlackRock. These developments are being seen as definitive steps to take on ecommerce giant Amazon which is making rapid inroads into the Indian online retail market. While they may be competing with Amazon, Indian ecommerce firms are looking to model themselves on the lines of Chinese online retail giant Alibaba.
This still-booming Indian industry has a number of small players making for a rather fragmented market. Consolidation – which is now being observed – is being seen as key to survival in this space.
Sachin Bansal, one of the two ex-Amazon employees who co-founded Flipkart, told the media in a conference in India on Thursday that Alibaba – not Amazon – is the company’s role model, and added that they did not perceive Amazon as being a threat. He said that in the near future, the ecommerce market will largely be steered by local players who will gain prominence, rather than global players such as Google.
Bansal drew parallels between the Indian and Chinese markets saying that the thought process of customers and the supply chain structure share similarities.
As of 2013, the online commerce market in India was pegged at USD 3 billion and experts predict it to spike to a whopping USD 50 billion by 2020, propelled by an exploding internet user base in the country.