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As Reliance mulls entry, it will be a tough 2020 for Amazon, Flipkart
With more and more Indians taking the online route to fulfill their shopping needs, e-tailers like Amazon and Flipkart are witnessing high demands, including from far-flung and remote areas
New Delhi: With more and more Indians taking the online route to fulfill their shopping needs, e-tailers like Amazon and Flipkart are witnessing high demands, including from far-flung and remote areas, but overall slowdown and negative sentiments - coupled with the new ecommerce policy and the likely entry of Reliance into the ecommerce space soon -- may spoil the 2020 party for the market leaders, say industry experts.
The later part of 2019 was not all that bad for Amazon and Flipkart as festive sales brought in record revenue for both the companies.
Online retailers in India recorded $3 billion (Rs 19,000 crore) worth Gross Merchandise Value (GMV) sales between September 29 and October 4, according to Bengaluru-based market research firm RedSeer Consulting.
Flipkart and Amazon's combined sales held 90 per cent of the market share.
A report by Forrester Research also predicted e-retailer sales to hit nearly $4.8 billion during the overall festive season.
Walmart-owned Flipkart claims it has over 60 per cent market share in the Indian ecommerce market while Amazon is believed to have about 30 per cent market share.
Despite facing regulatory hurdles in early 2019, Cloudtail India, which is the single-largest seller on Amazon India, reported revenue growth of 25 per cent for March 2019 quarter.
Cloudtail is owned by Prione Business Services, a joint venture between Infosys founder N.R. Narayana Murthy's Catamaran Ventures and Jeff Bezos' Amazon. Catamaran, which owns 76 per cent in Cloudtail India, is now being headed by ex-Infosys CFO Ranganath Mavinakere, Murthy's all-time favourite.
According to Satish Meena, Senior Forecast Analyst with Forrester, 2019's initial months were severely impacted by the new regulation fears.
"There has been an overall slowdown amid negative sentiments in the ecommerce sector. The sales did pick up in the festive season but overall, it has not been a great year and you will see cut in the 2019 growth forecast percentage for the Indian ecommerce industry," Meena said.
"Profitability is still a concern for the big players. There have been investment in certain new categories but nothing much has changed this year," he added.
Reliance's likely entry into the space by Diwali next year will bring in massive competition for both Amazon and Flipkart.
"The discount-driven approach which Reliance has mastered reflects in whatever vertical they put their money into.
They will likely enter the ecommerce space with the high-potential grocery segment near Diwali next year or may be later. Timeline is still a concern but they are coming big," said Meena.
