Flipkart wants to be like China’s Alibaba
New Delhi: India’s online retailers are bulking up on acquisitions and funding as they battle the world’s biggest Internet shopping giant, Amazon, for supremacy in the hyper-competitive domestic market.
Late last month, Flipkart, India’s largest e-shopping portal, announced the takeover of rival Myntra in a deal analysts estimated at $330 million – the largest of a string of transactions in the sector over the past two years.
“With Amazon entering the fray, it’s forcing domestic players to get critical mass to compete,” Ashish Jhalani, founder of Indian consultancy eTailing, told AFP.
“It’s still a fragmented sector and there’s more consolidation to come. It’s becoming a battle for survival,” he said.
For Flipkart, founded by two ex-Amazon employees, the game’s not just about beating their former Seattle-based employer on Indian turf. Flipkart wants to become the Indian version of the Chinese online shopping juggernaut Alibaba.
“Our role model is Alibaba,” Flipkart’s co-founder Sachin Bansal told reporters, adding there’s “a lot of similarity between the Chinese and Indian online retail markets”.
“What’s happening in China is inspiring – it’s bigger than anything in the US,” Bansal said.
India’s electronic or e-commerce sector is still puny compared with China, where business-to-consumer Internet sales are expected to top $180 billion this year.
But like China, India is home to a billion-strong and increasingly tech-savvy population – and analysts say Flipkart’s Alibaba ambitions are not so far-fetched.
Flipkart’s merger with Myntra created an entity with annual sales of $1.5 billion – over half of the country’s nascent online shopping market, estimated at $2.3 billion by Indian consultancy Technopak.
Online retail sales have been “growing in excess of 60 per cent a year, mirroring how e-commerce has grown in China”, Ankur Bisen, retail vice president at Technopak, told AFP.
Venture capitalists have been pouring money into the sector, scenting potential. So far, $497 million worth of deals have been struck this year, compared with $592 for all of last year. Most are small in value but important stepping stones as retailers build critical mass.