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Flipkart Vs Amazon – is the Smartphone Market New Perfect Arena?

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In the past few years, the US-based online marketplace giant Amazon has made a pretty rapid strut in India’s fast-growing e-tail market. Though the Bangalore-based online marketplace- Flipkart is still holding the number one position, Amazon is not far behind in terms of gross sales.

Flipkart continues to remain ahead of Amazon India in terms of gross sales,” says the latest ET report.

With a GMV value of $3.2 billion in the last fiscal year, Amazon sticks close to Flipkart’s $4 billion. Also, Flipkart-owned fashion portals Myntra and Jabong hold a pretty good share of 65-75% market share.

While in the case of Amazon, the company’s major sales volume comprises daily essentials of FMCG products.

The New Arena

This was the story of the regular market share and selling behavior of the two main giants in the Indian eCommerce market. However, the rivalry is definitely going intense, with both the contenders investing fortunes to acquire and retain the honorable position.

From the last year (2016) to date, a new shift can be easily noticed in the fighting arena for the duo. Apart from fashion, grocery, households, and others, both companies are stirring the smartphone market as a quick yet surefire way to leave each other behind.

Why not; based on the global smartphone shipments, a study by Statista says that “India to become third-largest smartphone market by 2017”. This is possibly why smartphones have become a center of attraction for the two giants in India.

Whether it is through massive discounts and offers, exclusive smartphone launches, or additional credit card discounts, they have been continuously shifting their attention to this potential loaded arena. Looking at the high demands in the budget section, it looks like the fortunes of the two will crucially depend on how many smartphones they will sell this year.

For Amazon, may it be possible to acquire the long waited position and cover the 0.5 billion gap in sales if it can win the race in the smartphone arena? As of now, 2016 was a winning year for Flipkart’s smartphone market share (59 %, to be exact). However, the first quarter of 2017 recorded a share of 29 % only. So, it may be possible.

The biggest challenge yet a big opportunity

The major challenge for both the companies selling smartphones in India is the limited access to the internet. With a population of around 1.2 billion people, only 390 million Indians are connected to the internet today. However this number is expected to grow to 730 million by 2020, but it is still far ahead.

With the advent of the revolutionary decline in mobile internet charges (thanks to free offers of Reliance JIO), more users have been connected to the internet this year. This has also led to a slight increase in the demand for budget 4G handsets. However, it is still not so impressive as most users still use the old 2G and 3G phones.

Can these users be considered as potential customers for 4 G-enabled phones? Why not. If the internet charges keep declining and affordable 4G smartphones are offered, these users would surely want to move to a faster network.

The next big challenge is from the mobile manufacturers themselves. The biggest in-demand brands like Xiaomi sell most of their smartphones on their own portal itself. This leads to a cut in the share of marketplaces as those phones could have been sold on their portals. Moreover, the challenge of the offline brick-and-mortar market is also significant. A large share of customers still feels that it’s better to buy smartphones from offline shops itself.

Breaking the trend

Understanding the seriousness of the situation, challenges, and a major trend was broken this year to best utilize the seasonal slow movement. We saw that holding Big Billion sales (Flipkart) and Great Indian sales (Amazon) once a year close to Diwali is no longer enough when the duo came up with the massive sale early in May 2017.

The sales stat for Flipkart is yet to come for this sale period. However, the expert predictions say that GMV is expected to remain at similar levels in 2017 too. Perhaps we should not hurry because 2017 is not over yet. It might be possible to see a different stat this year because Amazon’s sales stats are quite impressive for the May 11-14 Great Indian Sale period.

Smartphones came out as the best solution to attract new customers for Amazon. The company says, “It was the biggest day for smartphones in the year so far.” Day one witnessed a significant increase in the new customer acquisition, and most of them were for the smartphones themselves. Smartphones were among the top three categories in terms of sales and 7X more sales were witnessed as compared to normal days.

We await the sales stat for Flipkart. It would be interesting to see if Flipkart retains the position in the second quarter and still upholds 50% of sales through smartphones. Meanwhile, Amazon is slowly moving forward in the smartphone arena, and it would not be a surprise if the second quarter brings good news for it.

To conclude

It is clear that the eCommerce business has retained its fundamental behavior during the whole process of evolution-” niche targeting.” Since the two marketplaces have come a long way from the “chicken and egg problem of marketplaces,” they have no scarcity of supply, and neither they struggle to bring customers. Finally, it would depend on how the two marketplace giants handle the new niche (The smartphone market) and utilize it to acquire and retain the top position.

The fierce battle for the top position in the Indian e-tail market has come to a time when the top contenders are underway to redefine the delineation of the market. Whether it is through billions of investment or a buy-out of a weak contender, both the companies are spreading their niche to the highly demanded categories. Smartphones having the biggest sales potential in 2017 can surely decide the fortunes of the two in the Indian market. Let’s wait for a moment more, and I am certain the new arena is waiting with some surprising stats to be revealed by the end of this year.

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