Flipkart-Amazon competition goes beyond Diwali discounts


New Delhi: For the country’s top two e-commerce firms — Flipkart and Amazon — competition does not just begin and end with mega discount sales. The two are locked in a no-holds-barred competition encompassing the entire gamut of e-selling. For instance, in September alone Amazon registered requests from 24,000 new sellers who wanted to sell on its platform. “This is an unprecedented number. We have never seen anything like this in the world before,” said Gopal Pillai, director and GM, seller services, at Amazon India. The company has recently injected Rs 1,237 crore into Amazon Seller, which takes its overall investment to Rs 3,000 crore in just six months. This investment is over and above investments in logistics and warehouses.

Meanwhile, arch rival Flipkart’s founder Binny Bansal recently said that its next phase of mega investments of $2.5 billion (R16,570 crore) will be in creating a national fulfilment and logistics network.

While Flipkart has plans to end the year with 100,000 sellers, Amazon already has crossed that number. Globally, Amazon has 2 million sellers, and India is its fastest growing market. On an investor call, the company’s chief financial officer Brian Olavsky said that India might become the company’s fastest market to reach $10 billion in terms of gross merchandise value (GMV), which is total value of goods sold on the platform without factoring in promotions and discounts. Flipkart also claims a similar number.

Pillai said Amazon’s philosophy is to maintain the virtuous cycle — reduce operational cost, and improve volumes — of cost benefit that can be further passed on to the consumer. The effect is already visible in India. Amazon India’s seller base that do more than R10 crore in sales has grown 900% over last year, and sellers doing over R1 crore has grown 700%.

This, Pillai said, has been possible through a number of initiatives that the company has rolled out specifically for India. “Sellers use 90% of the services that Amazon offers to its sellers,” he said.

Its Easy Ship, service, which offers pick-up facility, is used by 30,000 sellers. Another service launched about four months back called Seller Flex allows the seller to keep the inventory in their own warehouse and yet use Amazon’s delivery service, Fulfilled-by-Amazon.

The service provider network allows sellers to avail services that help them put up their stock on the platform — from clicking pictures, to helping them in understanding technology, to bar-coding and helping them in managing the logistics.

“The features have particularly helped Amazon in growing their listing twice in the last one month, just ahead of the Diwali sale,” said Pillai. Amazon hosts 30 million stock-keeping units on its platform; Flipkart has 50 million. To help in better delivery of the products Amazon has opened a host of warehouses, or as they call fulfilment centres — 10 this year, which has taken the total count to 21.

Flipkart has 17. Bansal said that Flipkart will invest $500 million (out of the $2.5 billion) to build a network of 80-100 fulfilment centres over the next four to five years. “The fully-automated Hyderabad facility will be a benchmark that we will use for warehouses in all high-density clusters in the India,” said Bansal.


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