While the strategy worked during Bihar elections for the Opposition the same may not be true in the fight against the American internet giant Amazon in India
The Indian e-marketplace is witnessing a 'mahagathbandhan' of sorts with the country's largest player Flipkart raising $1.4 billion from a clutch of investors (Microsoft, Tencent and eBay) while also merging eBay's India business with itself.
While the strategy worked during Bihar elections for the Opposition the same may not be true in the fight against the American internet giant Amazon in India.
"Everybody has now realised clearly that the one player to beat is Amazon, and that it cannot be beaten individually, so can we form a mahagathbandhan and win the election. I think that's the strategy but I am not sure if the outcome will be the same," said K Vaitheeswaran, e-commerce pioneer and author of forthcoming book titled 'Failing To Succeed'.
Industry experts said the approach makes it even worse in the case of Flipkart because one need not necessarily be the guy with the largest amount of vote (read cash to burn). "It also requires you to be able to do the right things to beat the competition. And I think they (Flipkart and eBay) are still trying to beat Amazon on the wrong parameters," said another senior e-commerce consultant.
While the money raised allows Flipkart to continue the war with Amazon, the question to ask is, have you out-competed Amazon? "My view is that it is no longer possible to out-fund Amazon because it is profitable in other parts of the world. So putting another $5 billion in India is not an issue. So if you can't out-fund you have to out-compete with Amazon to beat it in the e-commerce game," said Vaitheeswaran.
How does one out-compete Amazon?
It's possible through delivering an extraordinary user experience by way of offering a good combination of selection, convenience, availability and pricing. Unfortunately, despite raising so much money in the last few years, players like Flipkart and Snapdeal haven't really scored a point when compared to Amazon's overall user experience.
"One should never bring a knife to a gunfight because you will never win the war and that's exactly what is happening in this case. Under the circumstances, I am not getting the confidence, based on current evidence, that the money being raised will be deployed to out-compete Amazon. Flipkart will continue to raise more until somebody in the company realises that they are on the wrong track," said an e-commerce expert, adding that people there are only focussing on raising money and increasing valuations.
The market has been abuzz about a possible merger of Snapdeal to strengthen Flipkart in this war against Amazon. However, experts see this development (if at all it happens) as another knife joining the gun fight. "eBay has been in India for 15 years and they haven't done anything to beat Amazon. Snapdeal joining the battle doesn't change much because they will still be behind Amazon when it comes to the overall user experience," said the expert adding that even vendors do not have a great business experience on Snapdeal and Flipkart.
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