Is Flipkart’s $2.5bn funding sufficient to take-down Amazon?

Rebecca Menezes | Sep 10, 2020

With $2.5 billion worth of funding juice from Softbank Vision Funds, Flipkart is ready to level-up with Amazon India. Its main rival has already taken the lead in sales for the first quarter of FY18. It has also managed to inject $2 billion into its Indian ecommerce unit. With the funding from its parent company, Amazon is building its online food segment and delivery network.

What will Flipkart do with its mega investment?

Those tracking the progress of the ecommerce sector claim that Flipkart will attempt to:

  • Increase its dominance of online fashion through infusions in Myntra
  • Fund the building of stronger private labels for higher margins
  • Scale up online grocery like Amazon

“Going forward, growth under multiple heads including new technologies like AI, omni-channel play and strategic alliances for better reach of private labels on the platform to increase margins, newer categories like groceries, furniture, digital content services like music, video and games will be high-impact areas for evaluation where there is enough funding to play a larger game,” said Sreedhar Prasad, partner-ecommerce, KPMG.

An online commerce company founder stated“I think they have realised that they will have to execute better and do lots of innovation to give a fight to Amazon. For this, Flipkart might acquire somebody who can make a difference to execution or few tough categories where they are weak such as furniture, babycare and FMCG.”

Acquisitions in the verticals where the etailer has troubles will solve the problem of building a supply chain for them.

Satish Meena a senior forecast analyst at Forrester said“To match up, Flipkart will have to invest at least as much as Amazon, and grocery will be important to increase wallet share.”

The revival of Flipkart First is also being looked into. Flipkart First is a programme that offers priority access deals, priority shipping and free next day delivery, similar to Amazon Prime.

Two independent sources also disclosed that Flipkart is looking for an answer to Prime.

Meena added“With the new round of funding we will see Flipkart expand its portfolio. It is likely that the company will revive Flipkart First programme as an answer to Amazon Prime apart from a strong push on private labels in the categories of small appliances and the Billion brand. There is a ready base of customers who have been loyal to the platform for eight to nine years and Flipkart First will provide much needed fillip to this.”

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Rebecca Menezes

Rebecca Menezes

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