Amazon to invest 3 billion usd more in India. Is this the end for Flipkart?
If you have done online shopping in India (and it is likely to be yes if you are reading this) you are aware with Flipkart. The online book seller turned India’s biggest e Commerce company has came a long way in a relatively short time and has been a subject of envy and admiration for many.
Flipkart has been known to deliver quality products on a committed time. And it managed to surpass the sales of the already biggies in the market like eBay, Indiatimes shopping, rediff shopping and few others.
The company forayed into online shopping when the market was in nascent stage and Indian consumers did not had much faith on the concept. Add to that there were a few “crooks” existent in the market and reports of online frauds were coming each day.
But the Company build trust. It started operation from the IT capital of India, Bangalore. Quick delivery and wonderful return policy were top priority for the company. At a time when most online Companies were delivering goods after 10 or 15 days, the buyers of flipkart were “shocked ” at the same day or next day delivery.
Much of the good work that flipkart did was because of the customer orientated approach of the company but there was a fund factor too that played a great role. Flipkart scaled as and when needed and they were too fast at it. Every few months there were news of the company raising funds.
The amount of funds raised by the company was soo much that it raiser eyebrows of many investors including stock market guru and so called Indian Warren buffet, Rakesh Jhunjhunwala. The valuation of the company was considered to be ridiculously too much and although the company made a pan India presence, the threats kept coming from all over. Add to that, the deep discount model that Flipkart (and virtually every other e-commerce company had), made the situation worse. The company has never been able to cloaked profit and the loss has increased. And of that was not enough, Flipkart made too costly acquisitions including purchasing of Rs. 2000 crore Myntra.
But then there was a flood of competition. From small niche shops to the competitors like snapdeal, eBay and relatively new entrant paytm, the threat calls were ringing from all corners. The real Bloodbath started in the space when Amazon entered the desi market first with jungle.com and then with Amazon.in
And when Flipkart thought there is a time to make some profits, the new companies backed by self funding or otherwise, were luring the customers with exciting offers. Although Flipkart has maintained the No. 1 share till now, things are not too rosy and the share is reducing with each passing day. Amazon is very aggressively marketing. Flipkart once had time and chance to be acquired by Amazon but they were confident about themselves. The valuations of the company have already been degraded and this is also an indication that the company is not in a sweet spot.
It will be interesting to see how things turn up and also interesting to see if Flipkart manages to sail through the tough time.
