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Business News/ Companies / Start-ups/  Amazon outsells Flipkart for second straight month

Amazon outsells Flipkart for second straight month

Flipkart registers gross sales of around Rs2,100 crore in August, slightly lower than Amazon

Photo: Ramesh Pathania/MintPremium
Photo: Ramesh Pathania/Mint

Amazon India sold more than local rival Flipkart for the second consecutive month in August, setting the stage for the festive season, the outcome of which could well determine the future of Indian e-commerce firms.

Flipkart Internet Pvt. Ltd registered gross sales of around Rs2,100 crore, slightly lower than Amazon Seller Services Pvt. Ltd’s sales for the month on a stand-alone basis, people familiar with the matter said on condition of anonymity.

A key reason for the increase in sales at Amazon was its widely advertised three-day sale event called the Great Indian Sale. During the sale, Amazon offered smartphones, fashion and other products at deep discounts and registered a three-fold jump in sales compared with its average daily numbers.

None of the people wished to be identified.

“As a policy, we do not comment on financials. We remain committed to offering our customers and easy and convenient access to India’s largest online selection available at competitive prices and a fast and reliable delivery experience," an Amazon spokeswoman said in an email.

Flipkart didn’t respond to an email seeking comment.

Flipkart’s numbers exclude those of Myntra and Jabong, the two large fashion retailers it owns. Including the two, Flipkart is still ahead of Amazon.

In July, Amazon India overtook Flipkart in terms of gross sales for the first time since it launched in June 2013, Mint reported on 23 August.

The months of July and August (the second, especially) brought some cheer to e-commerce firms and investors with extensive discounting and advertising driving an increase in online retail after several months of decline.

The revival of online retail and Amazon India’s lead over Flipkart sets the stage for the most important festival sales period for Indian e-commerce firms ever.

Flipkart is betting on a blockbuster Big Billion Day, its signature annual sales event that is held in October. If the company has a successful October, it may get the platform to keep improving its results and raise a fresh round of funds. Amazon has the momentum and superior spending power going into the festival sales period during which e-commerce firms typically generate a majority of their annual sales as customers spend freely on a host of products.

Still, it wasn’t all bad for Flipkart in August. While Flipkart lagged Amazon in the month, it finally registered a strong increase in monthly sales, indicating that the company is turning around its business under CEO Binny Bansal, who has been focusing on raising Flipkart’s customer service levels.

Meanwhile, Flipkart’s business and advertising head Kalyan Krishnamurthy has shaken up the company’s product category teams that are responsible for driving sales. Krishnamurthy, a former executive at Flipkart’s largest investor Tiger Global Management, has set aggressive sales, product selection and other targets, and insiders say that he is breathing down the neck of executives to meet these goals.

The efforts of Bansal and Krishnamurthy have started yielding results. Flipkart’s net promoter score, a key measure of customer satisfaction, has increased significantly since June.

In August, Flipkart also snagged some important exclusive partnerships with smartphone brands including Xiaomi for the first time in more than a year. Flipkart had launched low-cost, high-quality Xiaomi and Motorola smartphones in India in 2014, but lost these exclusive partnerships to Amazon India.

Flipkart is in advanced talks to sign more exclusive partnerships this month, the people cited in the first instance said.

Such partnerships will significantly boost Flipkart’s sales. Smartphones are the single-largest revenue generator for e-commerce firms, accounting for more than half of all online retail, according to analysts.

Unlike Amazon, Flipkart has taken a multi-brand approach towards e-commerce with its acquisitions of Myntra and Jabong. Together, Flipkart dominates fashion, the highest-margin category in online retail.

The company also has a payments arm PhonePe, which launched late last month and is expected to compete with Paytm and Freecharge for the country’s large payments market.

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Published: 11 Sep 2016, 11:54 PM IST
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