Amazon and Flipkart Control of Ecommerce

Amazon India and its largest local rival, Flipkart, which was modeled on the American Online retailer, are changing their strategies in diverging ways to dominate fast growing e-commerce market. Amazon India and Flipkart are the country biggest e-commerce firms. Both are supposed to operate as marketplace platforms that connect small merchants with buyers. They are not allowed to sell directly to shoppers.

But both the companies have adopted complex corporate strategies and used a mix of the marketplace and the direct selling business model. Amazon is using a joint venture to increase the direct selling component in its model, even as Flipkart is fast moving towards a marketplace. Amazon is willing to do whatever it takes to succeed in India, the last big unconquered e-commerce market in the world.

Amazon has already lost out to Alibaba Group Holding Ltd in China. Amazon success has been built on its avowed principles of offering the widest product coupled with low prices. To stay true in a nascent market such as India, the company has decided that it needs to have more control over its supply than what a pure marketplace allows. This requires more cash, but the online retailer has already pumped $2 Billion into its India Business over time.

Flipkart has changed its role model to China’s Alibaba. Flipkart was started in 2007 by two Amazon.com Inc. employees. The firm began as book retailer, just like Amazon in 1995 but gradually added all kinds of other products, including mobile phones, laptops and clothes. Until 2013, it sold all these directly to shoppers not through third party merchants. However, this model is simply not conducive to making profits.

Flipkart, which has raised $2.6 Billion over the past 18 months, is expected to report huge loss this year because of its aggressive expansion and deep discounting. At some point it needs to go public and the pressure to do that increases every year. Indian Ecommerce market resembles that of China more than the US. The success of Alibaba IPO strengthened Flipkart resolve to try and adopt Alibaba advertising driven revenue model.

Under this model, Flipkart plans to operate as a marketplace and earn the bulk of its revenue from ads and other services, such as logistics and warehousing charged to sellers. Flipkart is still trying to find the success formula that will work in India. Currently both companies along with Snapdeal have the same goal to dominate the e-commerce sales. 

SMEs to E-commerce platforms

Many small and medium enterprises (SMEs) have taken to e-commerce platforms to expand their reach, both in the domestic and global markets. According to a report, 50 Million SMEs in the country, at least three million, especially from smaller cities are already using e-commerce platforms. In coming years, the figure is likely to double and may touch 30 Million in five years.

Zeelplast Machinery was started with Rs. 50,000 in 2008. The company is based out of Ahmedabad. The fully automatic moulding machines manufacturing company was limited to supplying local areas, before it took to e-commerce. Now the company has evolved from strength to strength with its brand identity, marketing support and getting orders from across India.

According to a study conducted by Snapdeal and KPMG, nearly 85 percent of SMEs which adopted E-commerce believe it is a cost-effective medium for sales growth. It also claims SMEs actively adopting the internet for Business activity boast 51 percent higher revenue, resulting in 49 percent more profit and a seven percent broader consumer base than their offline counterparts.

Some E-commerce entities are also helping SMEs to procure raw material at affordable costs. This has emerged as a new line of business. Ahmedabad based tradohub.com is working in a similar way. It supports SMEs for buying raw material from international markets. Buying material from e-commerce platforms reduces the cost by six to eight per cent. This is helping SMEs to adopt e-commerce platforms which are beneficial for IoT and Indian Economy as well.

Best startup sectors in 2015

With the year almost drawing to a close, there are startup sectors which turned out to be major players in coming years. Beginning early this year, there was a great rush of venture money. As a seed round of a million dollars became the new norm, startup started mushrooming throughout the country. Some of the sectors that saw significant interests are IoT and Wearables, Hyperlocal, Food Tech, Logistics Management and Local Services Marketplace.

With the likes of Grofers, BigBasket and Pickingo vying for attention as on demand delivery partner, there is an explosion of Hyperlocal services. From delivering nuts, vegetable, to transportation services, Hyperlocal startups have managed to grab their fair share of eyeballs and investor money. However, this sector has become very competitive and it will be interesting to see how these startups scale and evolve in the future.

According to startup analyst firm Tracxn, about 90 startups and 50 plus startups have been founded in 2014 and 2015 in Logistics Management. Top funded startups include the likes of Delhivery, TinyOwl, Ecom Express and Gofers. The sector has seen a lot of interest because of the growth of ecommerce in India. This has led to the emergence of local delivery startups, food delivery startups, intra-city, inter-city, overseas, ecommerce shippers and freight aggregators.

The entire Internet of Things (IoT), which has meant over a billion dollars have been invested in startups in the IoT space globally over the past few months. Big VC firms like Sequoia Capital, NEA, Andreessen Horowitz and others have made a sizable investment in the space. On the other hand Wearables segment has seen a number of significant products taking over our life. Fitness bands are the most popular Wearables today, followed by smart watches. It is not surprising that many startups now consider Wearables the next big things.

Food tech is perhaps the most surprising sector. This has been mainly because the food and restaurant industry till now has been largely fragmented with little or no tech adoption. Startups have figured out a lot can be done in the aggregation business and in delivery. The sub segments that have done well in the space include both eat at home ordering and delivery, restaurant discovery and booking, in restaurant payments, office food delivery and food aggregators.

In a city where we are increasingly busy, availing services may not be easy. Whether one need a doctor, plumber, electrician, drivers, a bunch of startups now help in on the desired service provider. Startups like UrbanClap, Taskbob, LocalOye and Qyk have raised funding. Investors active in this field are SAIF Partners, Accel Partners, Tiger Global and even Snapdeal cofounders. While the primary way to avail local services have been through online search or classified platforms, Local services marketplace make it seamless. This has led to increasing popularity of startups.

Car Free Day

A Car Free Day, which is celebrated in more than 200 cities in the world, promotes improvement of mass transit, cycling and walking. Studies showed that for short trips in cities, one can reach more quickly using a bicycle rather than using a car. About 3.1 Million people ride bicycle every month. It is a European event that emerged in 1960s and it caught attention within three decades. This event is being scheduled in Gurgaon for every Tuesday; a city where handling road traffic is the first job of the day for many people.

While the movement of cars will not be banned in the city, pick up and drop facilities in offices and unauthorized parking on roadsides and other places will not be allowed in specific areas of the city. Specific locations are chosen in the city for the event. In my opinion, it is a good step towards sustainability and reducing rush and accidents on the road. The only thing is it has to be followed properly by citizens and structured in a good way.

Instance, one will save fuel consumption, save environment, save economy and traffic will become smooth. Day is not far when Humans will have to adopt sustainability forcefully. Increase in viral diseases, disasters, rapid consumption of natural resources will one day bring back life to focus on these things. This step taken by Gurgaon Municipal Corporation for the benefit of city people is a positive move.

Two days of this event and it emerged as a positive source of inspiration for cyclists. The reason why I see this event as a good source for community is I ride a bike daily to office. I leave ten minutes before my scheduled time and reach office before any person in car, starting from same point. The only difference is I feel the Sun, the Dust and the Sweat. The aim of this event is to switch people to public transport and we should join hands to make it a success.