A faster and more consistent browsing experience as well as the growing adoption of Amazon Prime helped Amazon India clock the same score as Flipkart in the sixth version of ELI.
According to the April edition of the RedSeer ELI, Flipkart and Amazon India were both locked at the top of the rankings with a score of 95, Mint reported on 25 April.
Both Flipkart and Amazon India came in with the same scores during the June quarter as well. However, Amazon India is increasing its score at a much faster rate than Flipkart, indicating that unless Flipkart improves its delivery speed, browsing experience, brand image and other aspects, it will soon be overtaken by Amazon India as the country’s most popular shopping platform.
Flipkart and Amazon India did not respond to requests for comment.
Other top online retailers such as Paytm and Snapdeal continued to lag the leaders, and every other retailer suffered a decline in performance—Snapdeal’s ratings fell by a couple of points to 78, while Paytm also saw a slight decrease in its score, coming in at 77. Paytm took a hit on net promoter score (NPS)—a key indicator of customer satisfaction—for the second consecutive quarter. ShopClues and eBay India, which was acquired by Flipkart earlier in April, brought up the rear, with scores of 66 and 56, respectively.
The latest rankings underscore the threat that Amazon India poses to Flipkart’s leadership in the Indian e-commerce market, despite the latter’s improved performance over the past nine months.
“Flipkart remained constant on the scorecard with only brand recall seeing a slight improvement in comparison to the last quarter," said the report.
For the latest report, the methodology used to analyse the performance of the top companies was tweaked to account for a demographic split between cities, due to the impact of the launch of Reliance Jio’s 4G service. RedSeer surveyed some 4500 online shoppers in 30 cities from April to June, tracking prices of various items across India’s top five e-commerce firms, which include Paytm and ShopClues.
“Paytm is constantly losing on consumer NPS in the past 2 quarters due to constant changes on the tech end reducing the customer experience," said the latest ELI report.
A key cornerstone of Amazon India’s performance over the last three-four quarters is its Prime loyalty programme. Amazon’s Prime service has also vastly helped improve perception of delivery experience, despite only a slightly superior performance against Flipkart. Mint first reported on 14 April that the Amazon Prime membership programme has become an important lever for the company in its battle against arch-rival Flipkart, accounting for nearly 30% of all orders on Amazon India.
“Prime is a sign of a healthy customer base—and that your customers are ready to pay for convenience," said Amazon India chief Amit Agarwal in a recent interview. “It’s been successful for Amazon globally—and India is no different. We will continue to invest in expanding the e-commerce market in India...and as we do that, we hopefully will see growth in Prime as well, because it indicates loyalty and loyalty has its own flywheel effect."
Amazon India also continues to lead Flipkart in terms of Web and app experience, according to the ELI report. Several other third-party market researchers have also backed up this datapoint. According to data from market intelligence firm SimilarWeb, which tracks website traffic, Amazon India’s desktop visits stood at 276 million for the quarter ended 30 June, compared with 167.6 million for Flipkart. For its mobile website, Amazon India recorded 311 million visits during the June quarter, compared with 157 million for Flipkart, according to SimilarWeb.
Over the past four years, Amazon has invested aggressively in India, committing to spend $5 billion to grow its business in the country. In June, Mint reported that Amazon had invested an additional Rs1,680 crore in its Indian unit as part of its commitment to invest $5 billion to expand its local business.
To be sure, Flipkart’s performance has not seen a decline in comparison to Amazon India. For instance, Flipkart came in ahead of Amazon India in terms of post-delivery experience, due to the former’s simpler return policies as compared to slightly more complicated post-delivery policies at Amazon India, according to the report.
Flipkart also came in slightly ahead of Amazon India in terms of price competitiveness and held its leadership position in the flagship smartphones business, helped by new deal wins, despite stronger competition from Amazon India during the quarter. Flipkart has also managed to keep its marketing expenses down and has brought down spending by nearly two-thirds, as compared to the beginning of the 2016 calendar year, when the first version of ELI was published.
This is part of a broader push inside Flipkart to curb losses. Mint reported on 18 July that Flipkart is pushing hard to cut losses as it seeks to prove it can build a profitable business. The company has set a target of breaking even at the gross profit level by the end of the current fiscal year by reducing discounts, logistics and warehousing costs.
Flipkart boosted its ability to take on Amazon India this month by raising a mammoth round of funding from SoftBank Vision Fund. Flipkart said it has more than $4 billion in cash after the SoftBank round, which comprised a capital infusion of $1.4 billion and another $1.2-1.4 billion of secondary share purchases.
The battle between Flipkart and Amazon India is expected to be much more closely fought this year compared with most of last year, when it looked like the world’s largest online retailer was running away with the Indian e-commerce market. Under new chief executive Kalyan Krishnamurthy, Flipkart has adopted a new strategy of focusing on selling high- value products such as smartphones and large appliances. It has worked so far—Flipkart generates higher sales in these categories, which together account for more than 60% of the e-commerce market, than Amazon India.
However, despite Amazon India and Flipkart’s consistent growth numbers over the past three quarters, the broader e-commerce industry continues to grow at a sluggish pace. Both Amazon India and Flipkart have largely grown at the expense of struggling rivals such as Snapdeal, while the overall market has grown at 15-20% over the past two quarters, according to experts tracking the sector.
“The industry hasn’t moved too much in comparison to Q1’17 on most metrics because of a stagnant sales quarter this time around," said the ELI report.