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I feel this analysis is missing the forest for the trees. Most of this comes down to Flipkart losing money to gain gross sales. However you may feel about this

by dharmon 10y ago

I feel this analysis is missing the forest for the trees. Most of this comes down to Flipkart losing money to gain gross sales. However you may feel about this strategy, it is basically what everyone, including Amazon, does. Be the cost leader to starve out your competition until they go broke or go home. However, Flipkart has two advantages over Amazon: 1) Mindshare. Flipkart is still the #1 association with e-commerce in India. Obviously this can change fast. Myntra is the only name for online clothes, which as the article mentions, is higher margin. 2) Flipkart is a local company. In this case it gives them two sub-advantages, a) they are allowed to sell directly to customers (foreign companies are not allowed to, Apple is currently trying to get an exception). This forces Amazon to act as more of a "portal", almost like Snapdeal. b) In India a lot of people are pushing for "India first" strategies that favor local tech over foreign companies. This gives Flipkart a slight political advantage. The article claims Amazon is "nipping at their heels". It's true, but the gap is much wider than you might think. Amazon pushes how they surpassed Flipkart in traffic, but in actual sales, Flipkart has a pretty large lead. Anyways, I wouldn't count Flipkart out yet. Amazon is spending money like crazy, and they have deep pockets, but so does Flipkart. At this point I'd say its anyone's game, but with the current advantage to Flipkart. The real current winners are Indian consumers, getting heavily subsidized goods.

thansharp 10y ago
Flipkart is not exactly a local company. If I'm right, most of their equity is held by a singaporean holding company. There's also this aspect that a loss-making company cannot go public in India, so Flipkart have structured themselves to IPO elsewhere.
sidm83 10y ago
Most of the points you have made here are grossly incorrect. Here is the reality : Flipkart is a local company No its not. The VC money invested in it is counted as FDI, and even its holding company is based out of Singapore. So it does not enjoy any such advantage. Its been several years since Flipkart stopped operating on the inventory model, it operates on the same marketplace model as Amazon/Snapdeal. The article claims Amazon is "nipping at their heels". It's true, but the gap is much wider than you might think. Amazon pushes how they surpassed Flipkart in traffic, but in actual sales, Flipkart has a pretty large lead.* Nope. The difference is in the range of only ~20% now. Flipkart does not have a magical conversion ratio that it sales can be a multiple of Amazon despite lower visits. You might have been misleaded by considering the figures of the seller side as well. Need to consider only marketplace revenues. Anyways, I wouldn't count Flipkart out yet. Amazon is spending money like crazy, and they have deep pockets, but so does Flipkart. Flipkart does not have pockets of its own. Its running on investor money, which comes with conditions unlike Amazon which can invest its own earnings from US and elsewhere, well justified owing to earnings growth potential. The real current winners are Indian consumers, getting heavily subsidized goods. Can't agree more with this point. FYI Amazon and Flipkart are nowhere close to the magnitude of cashback offered by Paytm (backed by Alibaba).

by dharmon 10y ago

thansharp 10y ago

Flipkart is not exactly a local company. If I'm right, most of their equity is held by a singaporean holding company. There's also this aspect that a loss-making company cannot go public in India, so Flipkart have structured themselves to IPO elsewhere.

sidm83 10y ago

Most of the points you have made here are grossly incorrect. Here is the reality : Flipkart is a local company No its not. The VC money invested in it is counted as FDI, and even its holding company is based out of Singapore. So it does not enjoy any such advantage. Its been several years since Flipkart stopped operating on the inventory model, it operates on the same marketplace model as Amazon/Snapdeal. The article claims Amazon is "nipping at their heels". It's true, but the gap is much wider than you might think. Amazon pushes how they surpassed Flipkart in traffic, but in actual sales, Flipkart has a pretty large lead.* Nope. The difference is in the range of only ~20% now. Flipkart does not have a magical conversion ratio that it sales can be a multiple of Amazon despite lower visits. You might have been misleaded by considering the figures of the seller side as well. Need to consider only marketplace revenues. Anyways, I wouldn't count Flipkart out yet. Amazon is spending money like crazy, and they have deep pockets, but so does Flipkart. Flipkart does not have pockets of its own. Its running on investor money, which comes with conditions unlike Amazon which can invest its own earnings from US and elsewhere, well justified owing to earnings growth potential. The real current winners are Indian consumers, getting heavily subsidized goods. Can't agree more with this point. FYI Amazon and Flipkart are nowhere close to the magnitude of cashback offered by Paytm (backed by Alibaba).