With every high, there is a low. It seems that the Indian ecommerce industry just hit its lowest point after experiencing jet speed growth.
The GMV (gross merchandise value) growth rate of biggies Flipkart, Amazon and Snapdeal was an unimpressive 11% in the last one year. It has made everyone wonder if the online retail industry has reached its saturation point.
The Game of GMV
The total GMV run rate of the three players was $9 billion in May 2015. And it was $10.2 billion in May 2016. The rate was slightly higher ($10.5 billion) in December, thanks to the great Indian festive season (October – December).
Out of the three, Amazon gained the most, Snapdeal the least. The American etailer’s GMV nearly tripled from $1 billion in May 2015 to $2.7 billion in May 2016.
While Snapdeal’s GMV dropped by half from $2.2 billion to $1.2 billion. Flipkart’s GMV marginally increased from $3.8 billion to $4 billion.
That’s why Flipkart abandoned the beloved GMV?
Remember how Flipkart’s co-founder and CEO Binny Bansal shared that the marketplace will now focus on Net Promoter Scores (NPS) instead of GMV? It is quite possible that the Indian etailer decided to channel its energy on new metrics as GMV wasn’t picking up as expected.
But Amazon’s NPS score too is higher than Flipkart.
Slowdown not so surprising
It was expected that an industry that heavily relied on discounts will face challenges post-FDI ruling. The number of sale events has dropped since March and the number of violation charges has gone up.
But dismal performance of the three ecommerce leaders doesn’t mean Indian ecommerce industry is approaching its end. In fact, the industry will continue to boom. What will change is the leadership position of the existing players and new entrants.