Beginning of a downfall?

After the entry of global e-commerce giant - Amazon in India and as severe competition rose across the
country due positive sentiment for budding businesses, Flipkart seems to be out of strategies to shield itself
from the competitors and has been losing heavily to them. According to an article by Economic Times, the
companys dominant market share based on number of shipped goods has been shrinking year-on-year, from
43% at the end of FY 2014-15 to 37% at the end of FY 2015-16. Meanwhile, Amazons market share has
improved substantially from meagre 14% at the end of FY 2014-15 to 21-24% at the end of FY 2015-16 and
Snapdeal lost its market share from 19% at the end of FY 2014-15 to 14-15% at the end of FY 2015-16.
Adding to its woes, Morgan Stanley Fund in November 2016 had slashed valuation of its holdings in
Flipkart by an alarming 38% which raised serious concerns on the companys potential and also on the growth
of Indian E-commerce industry. This is not the first time Flipkart encountered a valuation cut. Earlier, in the
month of March 2016, some of Flipkarts investors had cut its value by 23%, sending a signal of no-easy
money to them. In May 2015, Flipkart was valued at $15 billion while its current value stays around $5.54
billion.
Amazon has already beaten Flipkart in several non-financial parameters. Amazon had an average
monthly user visit of around 180 million against Flipkarts 120 million. Also, Amazons plan to tie up with
India Post could leave Amazon with an edge over its competitors by providing better reach to its customers,
especially to rural customers who constitute almost 70% of the total Indian population. Even in number of
sellers, Amazon with over 120,000 sellers across India enjoys higher popularity than Flipkart which has over
95,000 sellers registered.
Another major concern for Flipkart is its financial performance. The revenues for Flipkart havent been
growing at a rate as anticipated by the firm whereas Amazons revenues have been rapidly increasing due to
heavy spending on promotions, discounts, advertising etc. Following graphs (in Figures 1&2) depict the
growth of Flipkart against its rival for FY 2013-14 to 2015-16. Please note that the firms in question are
Amazon Seller Services and Flipkart Internet Pvt. Ltd. which is the marketplace for Flipkart.
From these two figures, it is apparent that Amazon has been shelling out lots of money to garner
popularity among Indian consumers by trying to provide them with impressive offers, experience and service.
By doing these, Amazon wants establish customer loyalty to its platform. Hence, it should be Flipkarts
priority to understand what its customers expect from its website and what it could do to improve their
experience and finally, achieve customers loyalty to stand out from its competitors. To understand the
customer satisfaction, a metric has been commonly used among the e-commerce firms in India. That metric
is Net Promoter Score (NPS). By looking at this score for Flipkart, Amazon and Snapdeal, preliminary nuances
can be derived about how the customers feel about using either of the marketplace platforms. Earlier, it Gross
Merchandize Value (GMV) that was of major concern to firms to prove their mettle in the industry, but slowly

it had been shifted to NPS as the firms had realized the importance of a consumer-centric approach towards
their operations.

Revenues in Cr Rupees
2500

2000

1500

1000

500

0
2013-14

2014-15

2015-16

Flipkart

Amazon

Figure 1*: Revenue battle: Flipkart Internet Pvt. Ltd. Vs Amazon Seller Service

Losses in Cr Rupees
4000
3500
3000
2500
2000
1500
1000
500
0
2013-14

2014-15
Flipkart

2015-16
Amazon

Figure 2*: Whos the loser?: Flipkart Internet Pvt. Ltd. Vs Amazon Seller Services
*Based on the data provided by Times of India and Trak

References:
http://economictimes.indiatimes.com/industry/services/retail/amazon-pips-snapdeal-to-become-indias-2ndlargest-online-marketplace-after-flipkart/articleshow/52017176.cms
http://www.wsj.com/articles/morgan-stanley-fund-cuts-valuation-of-its-holding-in-indias-flipkart1480509197
http://www.wsj.com/articles/flipkart-valuation-cuts-spark-concern-for-indias-billion-dollar-startups1456920275
http://www.firstpost.com/business/morgan-stanley-cuts-flipkart-valuation-by-a-steep-38-to-just-5-54-bn3131352.html
http://timesofindia.indiatimes.com/companies/Amazons-flagship-India-unit-beats-Flipkarts-inrevenue/articleshow/55741529.cms
http://trak.in/tags/business/2014/11/06/flipkart-amazon-snapdeal-revenues-losses-comparison/
https://yourstory.com/2016/06/amazon-flipkart-website-traffic/
http://economictimes.indiatimes.com/industry/services/retail/how-ecommerce-giants-like-amazon-andflipkart-are-piloting-rural-distribution-model-to-cater-small-town-customers/articleshow/47635478.cms
http://economictimes.indiatimes.com/small-biz/startups/amazon-india-triples-its-seller-base-ahead-offestive-season/articleshow/54340555.cms
http://indianonlineseller.com/2016/05/amazon-steals-the-number-one-spot-from-flipkart-yet-again/