According to the fourth version of the RedSeer E-tailing Leadership Index (ELI), Flipkart (Flipkart Internet Pvt. Ltd) has maintained its lead over rivals such as Amazon India (Amazon Seller Services Pvt. Ltd) and Snapdeal (Jasper Infotech Pvt. Ltd) in the e-commerce rankings with a total score of 97—the same score that it notched up during the last quarter.
Flipkart’s numbers were helped mainly because of greater brand recall among consumers, even as it improved on key metrics such as product assortment and lower product prices.
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For the October-December quarter, Amazon India in fact conceded some ground to Flipkart, according to the ELI report. Amazon’s score for the quarter came in at 93, with the American online retailer losing some points on criteria such as brand recall and post-delivery experience.
In the prior quarter, Amazon’s score stood at 95 indicating that it is within touching distance of Flipkart. Snapdeal and eBay also posted marginal improvements, while ShopClues posted a slightly lower score from the previous quarter, hurt mainly by lower customer satisfaction ratings.
While Flipkart and Amazon continue their battle, unicorn payments start-up Paytm proved to be the most improved e-tailer during the period, as the Vijay Shekhar Sharma-led entity continues to ride the post-demonetization wave of digital transactions.
Paytm came in with a score of 82, up from 75 last quarter—marking the second consecutive quarter in which the New Delhi-based digital payments platform has seen a sharp rise in popularity.
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While most top online retailers continued to be popular among Internet-savvy consumers, the overall customer satisfaction associated with online shopping took a hit due to the impact of demonetization, which prompted online retailers to temporarily suspend features such as cash-on-delivery, which in turn put off customers and led to a drop in sales.
“Industry NPS moved downward from Q3, impacted largely by the post-festive season hangover and demonetization. However, overall sentiment showed positive momentum in December as e-tailers worked around demonetization constraints," RedSeer said in the report.
The overall industry Net Promoter Score (NPS)—a key metric used to benchmark customer satisfaction—fell to 21% from 25% last quarter.
In the previous quarter, too, the overall NPS had declined, as online retailers struggled to keep pace with the higher volume of orders during the Diwali season sale.
The index, which is published on a quarterly basis in Mint, is compiled by research and advisory firm RedSeer Management Consulting, which specializes in e-commerce market research. The ELI doesn’t reflect the sales performance of the e-commerce companies concerned.
A total of 7,500 customers across the country were polled for the latest survey, which calculated the rankings based on three important criteria—the trustworthiness of a brand, the brand offering maximum value for money and customer satisfaction.
Each of those benchmarks was calculated on the basis of a further subset of metrics, including best prices and discounts, product range and quality of products. It does not reflect sales performance or losses.
For Flipkart, 2016 proved to be yet another tumultuous year when the company conceded market share to arch-rival Amazon India, saw repeated valuation markdowns from investors and then somehow recovered under Kalyan Krishnamurthy to fend off a rampaging Amazon during the crucial Diwali season.
And while demonetization has taken the wind out of the sails of the Diwali momentum for Flipkart, the company seems to be in a better shape than it was in last January.
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In an interview, Krishnamurthy said that the company now was well on its way towards recovery.
“2016 started with some challenges, but over the year it’s been tremendous from a growth point of view...we finished the year on a very positive note and we want to continue with that momentum in 2017," said Krishnamurthy.
“We’ve effected a complete turnaround of our business and consolidated our leadership position in e-commerce," said Flipkart co-founder Binny Bansal in an interview on 9 January. Bansal has now been re-designated Flipkart’s group CEO, a newly-created position aimed to help the company build so-called “newer engines of growth" and help with “IPO readiness".
For Flipkart, 2017 may prove to be yet another make-or-break year under a new management team and they will have to continue keeping at bay a rival such as Amazon, which seemingly has access to limitless pools of capital.
Mint reported first in October that Flipkart was looking to raise a fresh round of funds at a preferred valuation of $15 billion—a valuation that experts say is unlikely in light of the recent markdowns.
In a recent interview, Amazon India’s country manager Amit Agarwal indicated that the company would do whatever it takes to dominate Indian e-commerce.
“Our journey in India has barely started. We have a very long-term outlook for India and if we execute well, there’s no reason why India should not be one of our largest geographies. We will invest whatever it takes," Amazon India chief Agarwal told Mint in an interview on 22 December.
In July 2014, Amazon.com Inc. CEO Jeff Bezos promised to invest as much as $2 billion in India over the next few years. Last year, Amazon said it would invest an additional $3 billion in India.
An Amazon India spokesperson said in an email, “We are delighted by how in just three years, customers have reposed the trust in us that has seen us lead in things that matter to customers. Amazon India continued to show remarkable growth of over 100% (year-on-year) last year. We continued to lead the category expansion on e-commerce, to make it a daily habit, as customers across 97% of India’s serviceable pin codes chose Amazon.in to shop. And we saw another key inflection point when customers showed tremendous response to our flagship global program Prime which became a bestseller during the festive season and continues to be popular."