Amazon first launched in India in 2013. Since then, the Amazon marketplace has grown to around 550,000 sellers. In the last two years in particular it doubled in size, making it the fastest growing Amazon marketplace outside the U.S., according to Marketplace Pulse.
While on a trip in India, Jeff Bezos announced the company plans to bring more than 10 million micro, small, and medium-sized businesses in five years. Marketplace Pulse, however, says the growth rate will have to drastically accelerate in order for Amazon’s goal to be achieved by 2025.
Obstacles to Amazon India’s growth
One of the obstacles in Amazon’s way is homegrown Flipkart, which was founded in India in 2007 by Sachin Bansal and Binny Bansal, who reportedly both worked for Amazon before founding their own ecommerce company. Besides the home court advantage and six extra years Flipkart had to build before Amazon came on the scene in India, Flipkart last week announced it now delivers to 100% of serviceable pin codes in the country, whereas Amazon is still limited to just 14 cities.
In another move that could keep Flipkart ahead of Amazon, after becoming a major investor in 2018, it was announced Walmart will convert six of its 28 India stores into fulfillment centers for Flipkart.
Finally, Bloomberg Quint reported in 2018 that because of Flipkart’s fashion holdings, it would always have the upper hand over Amazon unless Amazon aggressively focused on expanding its fashion categories.
Amazon and Flipkart antitrust investigation
Both companies recently came under fire, however, and became the subjects of an antitrust investigation by the Competition Commission of India alleging the use of anti-competitive business practices, including the use of deep discounts and preferential treatment of some sellers.
Earlier in February, India’s high court granted Amazon an interim stay, and Flipkart is now petitioning to receive one as well. Following the interim stay announcement, Amazon released a statement saying it is confident in its compliance.
Despite the controversy suggested by the proposed investigation, Marketplace Pulse points out tactics like deep discounts are similar to what Amazon has used in other countries, some of which are also investigating Amazon’s practices, although India is the youngest market to do so.
More India competitors?
Amazon and Flipkart continue to be India’s top shopping apps, but there are constantly new competitors arriving on the scene as well, most recently China’s Club Factory, Quartz India reports. Of course, Club Factory isn’t without its issues, but it may serve as an important nudge to Amazon to continue checking itself when it comes to marketplace options where it might be lacking, i.e. fashion.
Will Amazon ever gain the upper hand in India? Considering how much Amazon dominates the ecommerce landscape elsewhere, it seems inevitable. After all, despite Flipkart having six years on Amazon in the India ecommerce space, Amazon quickly rose to the challenge and is hot on Flipkart’s tail when it comes to market share. But of course, Flipkart in just the last month has made major moves when it comes to delivery and fulfillment that could leave Amazon in the dust, at least for a while.
Of course, much will also depend on how the proposed Competitive Commission of India investigation pans out. If things work out in both Amazon’s and Flipkart’s favor, we can look forward to the continuation of healthy competition between the two companies for the majority of ecommerce market share in India.
If Amazon does want to become No. 1, it will have to first look at where it’s lacking in comparison to Flipkart and what categories customers want more of, and it will need to figure out a way to expand its shipping. Time will tell if Amazon will rise to the challenge.
Learn more about ecommerce in India by contacting Pattern’s international ecommerce experts at firstname.lastname@example.org.