The $20-billion online shopping mart is set for a mega clash of the titans, Amazon.in vs Walmart, in the coming months. This period, dotted with festivals, deep discounts and big sale days, which has so far seen Flipkart compete with Amazon, will now see the two US giants battle it out in the local market, writes Shelley Singh
“Expect them to outbid each other and make a big splash. The festive season bonanza could actually become bigger around Diwali this year,” says Vidya Shankar, executive director, Grant Thornton India. Adrian Lee, research director, Gartner, says, “User choice should improve. Greater range of Walmart private labels will differentiate the merchandise.”
On May 9, Walmart bought a 77% stake in Flipkart for $16 billion, pitting it directly against Amazon, which launched India operations in June 2013. Amazon has already spent $3 billion of its committed $5 billion to grow in the Indian market. Discounts will continue as ecommerce penetration in India is low — at 15% of retail — though now, “Flipkart will diversify its inventory to attract more Indian consumer segments that still haven’t started shopping online,” adds Lee.
A short-term status quo can be expected as Walmart clears regulatory hurdles, but soon enough, both will play to their strengths and make inroads into each other’s territories. While Amazon strengthens fashion and apparel where Flipkart has an edge, the latter with Walmart could eye new areas such as food, which Amazon started in India in February. Devangshu Dutta, chief executive, Third Eyesight, says, “Customers will see a deepening product mix and a focus from platforms to get new users.”
Of nearly 500 million internet users, less than 20% have shopped online, while less than 10% are regular shoppers. This user base will expand to 200 million by 2020. And there will be new categories.
“Ecommerce grew with mobiles and lowvalue, low-involvement categories such as mobile accessories. Today, with the platforms maturing, we see an enhanced focus on fashion, groceries and home and furniture — high-involvement categories requiring consistent customer experience,” says Sreedhar Prasad, partner and head, ecommerce and internet businesses, KPMG. Amazon is a pure play ecommerce company, while Walmart is the granddaddy of retail.
Harminder Sahni, founder, Wazir Advisors, says, “Once all regulatory approvals are in, Walmart will have its own people run Flipkart. Both have deep tech and retail experience. Walmart understands the space very well. Of course, the two will make it tougher for the small players.”