BY PRINITHA GOVENDER, POWER RETAIL
The world’s largest e-commerce platforms, Alibaba and Amazon are competing for the world’s fastest growing e-commerce market, India. Phil Leahy, CEO of Retail Global, and Paul Greenberg, founder of NORA, say they know who they’ll be betting their money on.
Amazon is Alibaba’s primary competitor in Asia, and slowly but surely, the Chinese e-commerce giant is strengthening its foothold in India.
Earlier this year, Alibaba group announced its plans to set up its first office in Mumbai, which is only a stone’s throw from competitor Amazon’s office there. There is talk that Alibaba has already rented 30 seats in a flexible office space in Mumbai, which will include its human resources, admin and operations team.
Analysts are predicting that the “Alibaba Vs Amazon” battle is way bigger than the “Walmart Vs Amazon” battle, with predictions the two will dominate the South East Asia e-commerce market very soon. India is currently going through a consolidation of its homegrown e-commerce companies as Amazon tightens the market share gap with them.
Alibaba on the other hand is also deeply invested in the country’s rapidly growing almost $20 billion e-commerce industry. Others contending for India’s burgeoning online retail market also include local players Flipkart and Snapdeal. We’re in for some exciting times according to Phil Leahy, CEO of Retail Global, who says he knows who he’ll be betting his money on to win.
“India is second largest country in terms of internet users and is set to become the second largest online retail economy in the next 10 to 15 years, overtaking the US. In short, Alibaba is not a major player there yet, while Amazon is battling for number one spot. Amazon is already the most visited e-commerce website in India, according to Alexa.com. Initially, it seemed that Flipkart and Snapdeal, both domestic, would own the market. Then came Amazon.
Alibaba is investing into Paytm, currently mostly a payments provider, but it could be an e-commerce site too. It already has a major stake in it. Alibaba has also previously invested into Snapdeal. So, Alibaba is taking it slow, evaluating the market before it enters it by buying either of those companies or, as itself.
Both Flipkart and Snapdeal saw their valuations plummet last year. Amazon is investing billions of dollars every quarter and competition has realised that they cannot out-fund Amazon. Flipkart and Snapdeal were never profitable, but they simply do not have the cash to outrun Amazon. Amazon can swim under the water for longer than anyone else. If I was a betting man my money would be on Amazon.”
Paul Greenberg, founder of NORA and a pioneer in the Australian online retail space as a co-founder of the country’s first online retail department store DealsDirect, says while the competition will be tough, there will be one clear winner out of Alibaba and Amazon in China, with Snapdeal and Flipkart having a sizeable presence there too.
“Two mighty e-commerce juggernauts are on the march. From the west, the mighty Amazon, who have vanquished the USA and European markets, and from the east, Alibaba, who have captured China, virtually in its entirety. They will meet midway, in the battleground of the new Eldorado, India. Jeff Bezos of Amazon has bet the farm, and rightly so, on this powerhouse retail market, India, with its burgeoning and aspirational consumer market. In China, Jack Ma, saw off eBay a decade or so ago. A quick and consummate victory, and indeed Amazon has battled to get a foothold in China via its JoJo partnership. India is different. A more ‘ anglicised’ environment given its colonial past, English the dominant language and a current government focusing on good governance.
So who will win? Difficult to say. Snapdeal and Flipkart will be consolidated by either or both parties and the top of the tree will be a two horse race. If I was a betting man, I would be putting my chips on black – Amazon, its dominance in the supply chain is the differentiator. But it will be a long time before the wheel stops turning and the ball rattles down into the winning slot. No more bets...”
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