Amazon India beats local ecommerce platforms Flipkart and Snapdeal, its top competitors, in overall traffic on web and mobile. Amazon generated between 33% and 62% more monthly traffic than Flipkart for the period from November 2015 to May 2016.
With the estimated growth of the Indian ecommerce market to be $120 billion by 2020, there is a huge opportunity for Amazon to take over market share from its competitors. Gross Merchandise Value, which has been long used to measure the success of ecommerce companies has led local players to neglect other metrics such as customer service, which Amazon success story is synonymous with. The latest traffic data suggests that it may contribute in grabbing market share from its bigger rivals.
Global vs Local Competitive Landscape
With the recent introduction of some new rules for ecommerce companies by the Indian government, including disallowing big discounts and predatory pricing, the industry’s focus from “lowest pricing” strategy has shifted towards quality services.
Amazon has recently injected more money into India totaling to $5 billion which will help them focus on building the backend technology and quality services including app and website experience, ease of payment, quick delivery, convenient return and refund policies.
On the contrary, Indian e-tailers’ ability to raise further capital has diminished – cash was burning to attract customers and gain market share via heavy discounts. It was recently reported that both Flipkart and Snapdeal had been unsuccessful in raising funds at their asking valuations of $15 billion and $6.5 billion, respectively.
Amazon has made aggressive moves in India since its launch in 2013 and has emerged as the most trusted online retailer. This could be another indication of their success in grabbing market share in the densely populated country. This also aligns with the trend of shoppers trusting global brands over local ones whether it is for consumer brands or ecommerce platforms.
With Alibaba’s India entry in April and Amazon causing top Indian ecommerce companies to rethink their success measurement metrics, it will be interesting to see who will emerge as winners in the global vs local ecommerce competitive landscape. Will local companies survive the competition and outperform the global companies in the long term?
A version of this appeared in Forbes on June 27. Read the full article here.