The word is out that the long-held ecommerce leader crown is slipping away from Flipkart’s hands and is moving towards Amazon India.
It has been reported that Flipkart’s July 2016 gross merchandise value (GMV) was less than Rs.2,000 crore, whereas Amazon’s gross sales was above Rs.2,000 crore in July. As for Snapdeal, it was Rs. 600 crore, way less than the other two online marketplaces.
It’s just one month, but should Flipkart worry?
To be fair, the above number is just for one month. And it doesn’t include revenues earned from other arms of Flipkart such as logistics, advertising, Myntra and now Jabong. Also, GMV is regarded as an outdated and incorrect performance measurement tool by ecommerce industry players and experts.
But we can’t deny the fact that Flipkart’s growth has slowed down and Amazon’s growth refuses to slow down. The American etailer continued to focus on increasing its product offerings, improving customer & seller services and utilizing funds effectively. On the other hand, Flipkart made some bad strategic decisions last year like converting Myntra into an app-only platform, app-only Big Billion sale, focusing on GMV rather than customer experience and losing important team members like Mukesh Bansal.
So there is a high possibility that this one month can turn into many more months in the near future and Amazon may replace Flipkart to become India’s ecommerce leader.
“This festive season is key for the (future of the) e-commerce industry. If Amazon keeps up the momentum, then it will be very difficult for Flipkart to keep pace with them. But if Flipkart has a great BBD (Big Billion Day), there’s hope that Amazon won’t run away with it,” said one industry insider familiar with Flipkart and Amazon’s numbers.
Can the makeover from marketplace to inventory-led save Flipkart?
A series of developments on Flipkart’s turfs more or less confirms that the etailer is gradually shifting from marketplace model to an inventory-based model.
All the above suggests that Flipkart is moving away from marketplace and is transitioning into a retail inventory-based format to improve customer experience and gain control over quality of its product portfolio.
A person aware of Flipkart’s strategies disclosed,
“By working with only a few sellers, you get more control over what you’re selling. So automatically, the quality will improve. Additionally, Flipkart gets control over the shipping, so that is really important in making deliveries faster and also in meeting delivery times.”
Since, Flipkart is now planning to work with selective sellers; we wonder what lies ahead for hundreds of other sellers listed on the platform? How the ‘marketplace’ plans to deal with issues of sellers who aren’t favoured by Flipkart? And how legal is this transition?