I think I made the title way too obvious. It has robbed me of the opportunity to introduce the topic any further. Yes, it is now a full blown war between these two. And gueess what? All of us have front row seats to the showdown. But, does everyone know what's actually happening? Let's try to analyze how an Indian startup locked horns with the biggest ecommerce company in the world. Oh, the shivers.....Drumroll please.
As most of us are familiar Flipkart was founded in 2007 by two ambitious IIT Delhi graduates Sachin Bansal and Binny Bansal. And here comes the ironical twist in the story... both of them were previously working for Amazon. Whoa... Isn't this the stuff bollywood flicks are made of?
So, these two ambitious guys decided to try their luck at the whole startup scene by copying their employee's formula. They even applied the same business model. Initially, Flipkart focussed only on books. Well, no wonder Amazon is pissed.
At that time the e-commerce scene in India was in modest words, catastrophic. The corporate sector, didn't even bat an eye over this startup, as everyone knew that the e-commerce market in India was a ditch. So, no one ever thoght that Flipkart would ever go further than selling books on the internet. But, it surely did. And they did so in style.
They managed to gain more investors and finally hired a marketing team, which gave way to their first TV commercial.
So, for the first time in the history of e-commerce in India, a company had come along that had managed to grab attention. Their services were highly effective in the Urban metros and their products appealed to scores of youngsters.
But, Sachin and Binny knew that they would not be able to survive unless they diversified their product line.
In came Tiger Global who pumped $10M into the company. And three months later, Flipkart introduced a new product line, which would take its fortunes to a whole new level. The product was Mobiles and Accessories. No one would have thought that the same Indians who heckled the salesmen at local electronics shops before buying a measely Juicer Mixer Grinder, would be purchasing mobile phones off the internet.
Their plan had worked. Flipkart had managed to get into the homes of Inidans with their amazingly low prices and even greater delivery channels. The road forward saw Flipkart raise a total of $170M in funding from various investors, the majority investment by Tiger Global. Their product line expanded even further as Flipkart became an online supermarket, selling evrything from stationery to bicycles to gift items, computers and so on.
Everything was falling in place for them, until June 2013, when Amazon officially entered the Indian market. And boy, were they aggressive. They had behind them a network spread all over the world; their pockets so deep that they could remain entrenched without any funding for atleast 5 years. Amazon's entry was a matter of concern for Flipkart. Their owners were well aware that Amazon was a force to reckon with and that their days of free run had come to an end.
Amazon had arrived at a perfect time in the Indian market. The e-commerce market had already matured and bloomed, thanks to flipkart. A perfect case scenario. While all this while Flipkart had worked its way to the top, Amazon was now going to eat off of their hard work.
But, Flipkart stood tough, and in the July of this year, in came a whopping investment of $1Billion from its investors. While the Indian market was still in awe of this amazing feat by an Indian e-commerce company, the very next day came Amazon all guns blazing with a $2Billion investment.
Amazon had made it clear to Flipkart that this was an all out war to the end. And even the Indian corporate honchos are in on it, with Wipro's Azim Premji supporting Flipkart, while Infosys's NRN Murthy going for Amazon.
But, enough about history and facts and figures. In the coming year or two what's going to matter is how Flipkart is going to respond to the severe competetion that it will face at the hands of Amazon. This war can be easily compared to a game of poker. Flipkart called and Amazon raised the ante. But, Flipkart cannot continue to use this hand for long, because as I mentioned above, Amazon has deep pockets and they are fully capable of raising Flipkart's every call.
The question that excites me the most is, that eventually, will Flipkart go All-in or will it succumb and be taken over?
The important thing to take from here, is that in this war, the beneficaiaries will be the customers. They will witness as two wonderful companies match blow by blow, bringing out services that will revolutionize the Indian e-commerce market.
P.S- To those of you who who are going all Gandhian over the point that Indians should support Flipkart because its an Indian company, recheck your facts. Flipkart is registered in Singapore. Almost all of its investors are foreign. So, that does not make it an Indian company. What should really affect your choice is, which company suits your needs better.
For more discussion on this topic and feedback please email me at sidshrma@outlook.com
Nice insight.
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