Info-tech

E-comm race: The clock is ticking for Flipkart

Sangeetha Chengappa Bengaluru | Updated on January 08, 2018 Published on October 27, 2017

Indian e-tailer must act fast and innovatively to counter Amazon’s juggernaut approach with access to unlimited resources

As another festival season gets over, Flipkart could be running out of time to stay ahead of the race as another round of deep discounting may have hurt the e-tailer more than Amazon, which has access to unlimited resources at its command unlike its cross-country rival.

Sources in the industry told BusinessLine that Amazon could be wearing down Flipkart because of its juggernaut approach, steadily mowing down competition with a $5-billion investment commitment to the India market.

“To take on Amazon, Flipkart needs to add new verticals and ramp up its product selection to become a one-stop shop for online shoppers, who don’t have to look elsewhere for what they want,” says Rajeev Banduni, CEO of GrowthEnabler, a London-based provider of insights and intelligence on disruptive start-ups. “Second, it has to ensure high repeat-purchase rates among its customers by guaranteeing a flawless online shopping experience backed by a strong supply chain back-end. Last but not the least, Flipkart must innovate to create a superlative customer experience through AR/VR (augmented and virtual reality).”

To understand the magnitude of the product ramp-up required, it is pertinent to note that Flipkart currently offers a selection of 80 million products, half that of Amazon’s 160 million. Flipkart has recently introduced furniture as a category and is yet to launch groceries, which is a high repeat-purchase category, constituting a large part of a shopper’s monthly household expenditure; while Amazon, in addition to furniture has already launched groceries as a category with Amazon Now and Amazon Pantry.

Founder of Portea Medical and promoter of BigBasket and Bluestone.com K Ganesh says Flipkart, which has taken its bets largely on mobiles and consumer electronics, needs to stop being discount-driven and change its product mix to include profitable, high-margin products.

To ensure customer stickiness, Flipkart must also increase frequency of purchases, which is why it wants to launch groceries, as people buy groceries every month at an average basket size of 12 items and then top it up once or twice a week thereafter, he said, cautioning that it is one thing to be an online superstore and quite another to be an online grocer.

“The latter is not easy, as it requires complex backward integration from farm to fork, that takes a great deal of effort and expertise to build.”

Globally, Amazon has been trying its hand at groceries for a long time, and a few months ago, acquired Whole Foods Market, a high-end organic food store chain in the US, to build an offline/online model that benefits customers. “Amazon offers Whole Foods’ products at a discount of 20 per cent online, which is great for me as a consumer,” says Banduni.

‘Game changer’

Industry experts, including Harish HV, Partner at Grant Thornton, agree that Amazon’s ace card is its Prime membership programme, which not only offers a superior shopping and delivery experience at ₹499 per annum ( to be upped to ₹999 next month), but also delights consumers with a boatload of content including videos, movies, TV shows, comedy shows, original series and the soon-to-be launched, ad-free, on-demand music across devices at no additional cost.

“Prime is the game changer putting Amazon in the lead with a growing band of loyal shoppers, which is more than just a loyalty programme. Flipkart did launch Flipkart First, but it was just a loyalty programme with speedy service guarantees,” said K Vaitheeswaran, author of Failing to Succeed - The Story of India’s First E-Commerce Company. He believes the only way Flipkart can stay on top of its game is to differentiate its product and service offerings.

Amazon has a very strong commerce, content, cloud and advertising business to back it, while Flipkart has failed in the advertising business and has no play in the content or cloud business, making it that much more difficult for it to compete with Amazon, observed Sanchit Vir Gogia, Chief Analyst, Greyhound Knowledge Group.

Published on October 27, 2017
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