Amazon sets up sales showdown with Flipkart
Bengaluru: The Indian unit of Amazon.com Inc. is preparing to launch its flagship annual sale later this month and is pulling out all stops to overtake arch rival Flipkart.
Amazon India could find competing with and besting Flipkart a tough challenge given the latter’s position as one of the most well-funded start-ups in the world after it raised $3 billion this year.
Flipkart plans to hold its flagship Big Billion Days (BBD) sale from 20 to 24 September. Amazon India did not reveal the dates for this year’s Great Indian Festival, but according to an executive familiar with the company’s plans, Amazon is expected to hold the sale around the same time.
In an interview on Friday, Amazon India chief Amit Agarwal said the company had ramped up its capabilities since last year’s Diwali season sale, adding that its American parent will continue to invest heavily in India in the near term and help expand the online retail market in the country.
“We are pretty confident that this will be our biggest shopping season ever...in our four-year history (in India). At a high level if I compare this year’s Great Indian Festival with last year, we’ve added more than 80 million products and grown selection two times. It’s like adding one whole Amazon in the last one year for our customers,” said Agarwal, who was elevated to the rank of senior vice-president at Amazon.com earlier this year.
Amazon said it has more than doubled its seller base from last year to over 220,000 sellers, increased the number of products that are eligible for delivery under its Amazon Prime subscription service to 7 million and also doubled down on its infrastructure and warehousing capacity. Like Flipkart, Amazon plans to attract new customers with steep discounts and other offers such as no-cost EMIs (equated monthly instalments), exclusive products from big brands and buyback offers.
A centrepiece of Amazon’s festive season sale will be Prime, its annual membership programme that offers customers fast product deliveries, additional discounts, video streaming and other benefits. The firm launched Prime in July 2016 at a 50% discounted annual price of Rs499. Since then, millions of customers have signed up for Prime, which has become a key differentiator for Amazon in its fight with Flipkart.
“We’ll build upon the success of Prime Day. Our subscriptions have gone up two times since January...we’re seeing a lot of interest from customers in signing up for Prime before Diwali,” said Agarwal, adding that Amazon will roll out special offers for existing Prime members.
Since its launch in June 2013, Amazon India has spent more than $2 billion to expand rapidly in the last big unconquered Internet market in the world. Amazon has been running neck-and-neck with Flipkart for more than a year but at the same time, its unprecedented spending spree has been questioned by analysts. Overall, Amazon has committed to invest at least $5 billion in its India business.
Flipkart is looking to widen its lead over Amazon during the festive season sale. Internally, Flipkart chief executive Kalyan Krishnamurthy has set an ambitious target for his executives to more than double sales from last year’s BBD, when it had generated gross sales of at least Rs3,000 crore.
The Diwali season clash between Amazon and Flipkart is expected to be as hard fought as last year. The competition between Flipkart and Amazon grew so intense last year that both companies even resorted to a bitter war of words.
In October last year, Flipkart co-founder Binny Bansal had taken a swipe at Amazon, saying that the American e-commerce giant had misjudged customers’ needs during the festive season sale by focusing on the sale of groceries, which helped inflate Amazon India’s sales numbers. A few days later, in an interview with Mint, Agarwal responded to the put-down by saying Amazon had accomplished in three years what Flipkart hadn’t despite launching much earlier and acquiring several companies including Myntra and Jabong.
This year, however, the online retail landscape looks vastly different with the Indian e-commerce battle effectively having become a two-horse race between Amazon and Flipkart, following the rapid disintegration of Snapdeal.
Also, unlike last year, when Flipkart was under tremendous pressure to pull off a successful BBD in order to raise more funds, the Bengaluru-based online retailer finds itself in a position of strength with enough financial firepower to keep Amazon at bay.