Alibaba in India?
Editor’s note: This article is from the WeChat public account “Xiaguang Society” (ID: Globalinsights), author : Irelia.
Six years ago, Flipkart held its first “Big Billion Day” sale event in its history. Today, such an annual celebration and sale has become a landmark event for e-commerce platforms. However, when the event was held for the first time, it was a mess.
At that time, the company advertised this one-day celebration event as “the largest discount sale in Indian history.” However, the event encountered many problems: the peak of passenger flow caused several web page failures, products sold out too quickly, and third parties The seller refused to process the order at noon and so on.
This time the user experience was so bad that there were rave reviews on social networks, Flipkart had to issue an apology the next day. Nonetheless, the “novice” Flipkart won a $100 million order within 10 hours of the day.
This retailer, which started in Bangalore in 2007, has continued to go on firmly since then, turning “Big Billion Day” into a carnival that lasts for several weeks, during which the platform will release flagship products. , Give customers a great discount. According to data from the local research organization Redseer Consulting, Flipkart sold $2.5 billion worth of goods during this year’s “Big Billion Day”.
In contrast, its biggest competitor, Amazon India, has also held a similar sale carnival “The Great Indian Festival” in the past few years. In India, large-scale e-commerce companies usually choose three or four weeks to hold annual sale events between October and December. This time is also a time for festivals, including the influential Diwali. But in the first week of the event, Amazon only achieved about $1.2 billion in sales, less than half of Flipkart’s.
Forrester’s senior forecaster Satish Meena said: “The big sale carnival was created by Flipkart. Since we had ‘Big Billion Day’ in 2014, Amazon has been inferior to Flipkart.”
However, Flipkart’s campaign to leave Amazon India behind is not just a big sale carnival, but extends to market share. In 2018, a Forrester report estimated that Flipkart and its fashion platform accounted for approximately 40% of the market, while Amazon accounted for only 31%.
Currently, the two consider themselves to be the first brothers in the Indian online shopping market. RedSeer believes that by the end of 2020, the Indian e-commerce market is expected to reach 38 billion US dollars. Many industry experts believe that Wal-Mart’s $21 billion acquisition of Flipkart in mid-2018 is sufficient to reflect the value of Flipkart in the eyes of supermarket giants. It is the one that leads the e-commerce industry in India.
Walmart CEO Doug McMillon and Flipkart co-founder and CEO Binny Bansal at an event in Bangalore
01 Flipkart’s growth path
In 2007, Flipkart started as an online book sales platform. In the first three months, the platform only had 8 to 10 orders a week. By the end of 2008, there were about 100 orders a day.
Flipkart co-founder Binny Bansal told the local Times of India that when the company’s online penetration rate in India was only 4%, it resolutely adopted a strategy of focusing on only one category, which helped Flipkart survive in the market. Go down.
Flipkart did not enter the mobile phone field until the beginning of 2010. After 10 years, this category has accounted for half of its e-commerce platform sales. Then in 2012, its online platform entered the trendy apparel field with the mentality of letting go.
When Amazon made its debut online in India, it brought Junglee.com, a consumer price comparison platform. A year later, the e-commerce company from the United States launched its shopping website in India. The shelf categories include books, movies, TV shows, mobile phones, cameras, and later more types of electronic products.
The “first come” Flipkart has led Amazon in the fast-moving fields such as electronics and apparel. 330 million in May 2014After the US dollar acquired the fashion platform Myntra, the market share of the two online fashion sales has reached 60%. However, the “latecomer” Amazon just introduced the fashion category on the platform a month before Flipkart acquired Myntra.
RedSeer’s senior consultant said, “At first, people were reluctant to buy fashion online because they didn’t know DaoheNot suitable, but when the e-commerce platform made the return process more convenient, the fashion industry officially began its online development.”
As more and more people buy fashion and accessories online, market competition has become fierce. At that time, Flipkart and Myntra together accounted for about 50-55% of the online fashion market, and Amazon accounted for about 17-18%.
Flipkart’s dominance of the online fashion market gives it the confidence to attack the throne of India’s e-commerce company. The solid position of online fashion also makes Flipkart attract countless fans in small cities.
“The breakthrough for getting customers in smaller cities is fashion,” said Meena, the agency’s senior forecaster. “For many entry-level online shopping players, fashion has become a starting point. Because there are many people who want to try online shopping, but they may not come up and buy’big items’ like smartphones.”
Many fashion brands like H&M and Zara are not available in relatively small cities in India, which gives online fashion platforms the opportunity to develop in these places. In the past six years, Flipkart and Myntra have seized the opportunity to cooperate with local third-party sellers to create many self-operated brands.
Earlier this year, Flipkart invested US$35 million in Arvind Youth Brands, a subsidiary of Indian fashion retailer Arvind Fashions, which focuses on youth routes. Last month, Flipkart once again strengthened its position in the online fashion market, investing US$200 million in Aditya Birla Fashion and Retail Ltd (ABFRL), another traditional physical fashion retailer.
FlipkarKalyan Krishnamurthy, CEO of t Group, said in a recent interview with local media Mint that the company is trying to create a fashion brand in a cooperative way. “The boundaries between physical fashion retailers and e-commerce will only become blurred,” he said. For this year’s big sale carnival, e-commerce companies have cooperated with 100 local fashion brands, and the platform has more than 2,000 shops. Recently, the company also announced its investment in Universal Sportbiz, a fashion company that sells celebrity promotions (the consideration has not yet been announced).
02 Focus on the sinking market
Forrester senior forecaster Meena said that Flipkart has a leading position in mobile devices and fashion, that is, it has two seats in the three largest e-commerce sales categories (the other is electronic products).
“Because money flows into the smartphone and trendy apparel sectors during the big sale carnival, Flipkart is in the two leading categories, so it can continue to maintain its leading position.” Meena said.
Flipkart chose to expand in these two product categories because it strategically positioned the company as a “market” in the overall environment, focusing on lower-priced and more affordable categories. This has also enabled Flipkart to establish a great influence in the second and third tier markets.
Industry experts believe that Amazon mainly targets first-tier customers from high-income families, but Flipkart’s target customers are not only large cities and high-income people. Flipkart not only has high-end products, but also meets daily needs, while Amazon’s products are relatively low cost-effective.
Not only that, Flipkart often sells some masses in the second, third and fourth tier cities