Signs that e-commerce in India is about to take off?

  • Charles Kauffman
  • October 4, 2016
  • 0

Fall 2016 could prove to be a monumental time for Indian e-commerce.  The country’s two largest homegrown players, Snapdeal and Flipkart, along with Amazon, have all launched aggressive campaigns to make online shopping synonymous with the upcoming “Diwali” festival. And if it seems like there’s an “elephant” missing from the room, that also could soon change. Rumors have been circulating that Walmart executives recently toured India, and may be nearing a $1 billion deal to acquire a slice of Flipkart.

Will carrier's like Quikjet be able to fill e-commerce demands in India?

Will carrier’s like Quikjet be able to fill e-commerce demands in India?

As e-commerce growth levels out in China, it could be India’s time to shine. The gross merchandise value of goods purchased online by Indian consumers is expected to grow at around 40% annually over the next four years, reaching $28 billion by 2020, according to estimates from Kotak Institutional Equities. Such growth will necessarily require significant investments in domestic express delivery infrastructure if customers are conscious about speed, and they are. But is Indian e-commerce really nearing an inflection point?

If the sale period leading up to the Diwali festival is anything of an indicator, orders are skyrocketing, and delivery speed is of critical importance. Each of the three companies have launched 120 hour sale campaigns, starting and finishing at different points in early October. Now that all three have launched their sales, data is starting to trickle in. Across the board, orders were up five-to-six fold over 2015 during the first twelve-hours of each company’s day-one sales.  Flipkart led the pack with sales of 2.25 million units, while Amazon and Snapdeal meanwhile, were at 1.5 million, and 1.1 million units respectively.  These figures shed some light on the potential impact of a Wal-Mart injection into Flipkart.

After a failed bricks-and-mortar venture, Wal-Mart is nearly absent in India. A major investment in Flipkart would give the company a solid entry-point into Indian online retail. At the same time, the deal could free up much needed capital that Flipkart could use to better compete with Amazon. Even though Flipkart still maintains a slight edge over Amazon, aggressive investments could turn the tables. Amazon recently announced a plan to invest an additional $3 billion in the country, on top of its initial $2 billion investment. The latest round of investments from Amazon would likely be channeled towards enhancements to its fulfillment and distribution capabilities. In July of this year, the company opened its 22nd fulfillment center in India. Prime Air meanwhile, has yet to take-off in India.

 

  Like This Post

Leave a Reply

Your email address will not be published.