Will Flipkart, Snapdeal survive Amazon onslaught?

Jeff Bezos is pouring in billions in India and the bucks seem to be paying off. A report from Livemint says that India’s homegrown etailer Flipkart was dethroned by arch-rival Amazon to become the biggest online retailer in India last month.

Citing five people with knowledge of financial numbers, the publication reported that Seattle-based company had better gross sales than the Flipkart in the month of July. Amazon India’s gross sales were over Rs 2,000 crores in July while Flipkart reported gross sales or gross merchandise value (GMV) of less than Rs.2,000 crore. Sales at Snapdeal, another well-funded competitor, were much smaller than either, according to the report.

Flipkart, founded in 2007 has been the largest e-commerce firm in India since at least 2011 but is facing ever increasing competition from Amazon India that dates back to only 2013.

The increasing pressure also led to a top deck reshuffle at Flipkart a couple of days back with Kalyan Krishnamurthy, a representative of its largest investor Tiger Global Management, given additional charge of Flipkart’s marketplace, retail, and advertising businesses. The increased scope of his role could be seen as a move by Tiger Global to steady Flipkart’s operations as Amazon continues to pour billions into Amazon India.

Though, both Flipkart and Snapdeal have raised more than a billion dollars but have historically recorded big losses as they’ve engaged in discounting battles with each other and with Amazon. And now with Amazon going full guns blazing in India, it seems like every week there’s a new rumor of the two homegrown players considering a merger or sale.

In any potential talks, however, Flipkart and Snapdeal’s frothy valuations could be a problem. Flipkart was valued last year at $15 billion while Snapdeal most recently secured a $6.5 billion valuation.

After having failed to make a mark in China, Amazon has been very aggressive in India in recent months. A few weeks back the US-based company had announced that it will be investing an additional $3 billion in India, making the total investment in the country to $5 billion dollars in three years. Last month, it also made its same-day-delivery service Amazon Prime available in over 100 cities in India and announced it will be bringing its on-demand video streaming service Amazon Video to the country soon.