Flipkart CEO says Amazon can't win e-commerce battle with capital

27 Dec, 2016

Flipkart and Amazon -- the top two e-commerce players in India -- are engaged in a fierce battle for supremacy in the country's fastest growing market. Even after gaining around 80% market share in fashion e-commerce, the market leader Flipkart faces stiff competition from its arch rival Amazon which is pouring money into India to topple it from the leading position.

US-based Amazon.com Inc. is said to have invested Rs 2,010 crore ($296 million) more in its India unit. The investment was made last month and is the largest capital infusion into Amazon Seller Services Pvt Ltd so far. Amazon, which started operations in the country in June 2013, has already invested $2 billion into its India business and in June this year, Amazon's founder and chief executive Jeff Bezos committed to spend another $3 billion in India. And, the company's India head recently said that Amazon's $3 billion investment commitment is on track and that it would take a lot more investment to unleash the true potential of e-commerce in India.


However, Flipkart CEO Binny Bansal doesn't look at Amazon's heavy spend as a problem. In an interview to The Economic Times, Bansal, while commenting on Amazon investments into India, said, "Cash is like a drug, and when you start solving problems with cash you get addicted to it. You can do it for some time but doing it continuously is not possible. Innovation is the only answer, and as long as we keep innovating we are fairly confident."

He further believed that India is not the US. Amazon can win the e-commerce battle there, but not in India. Bansal gave examples of other markets such as China (with Alibaba) and Japan (Rakuten) where Amazon has been "competing for ages and has not become the market leader."

Flipkart is confident of winning this battle as, according to Bansal, the company rules the three biggest segments in the e-commerce market -- mobile phones, fashion, and appliances. "We have not won them (three segments) because of capital. It's a very different ballgame, and that game Amazon has not won anywhere," he said.


Moreover, the company expects its fashion business to turn profitable by the middle of next financial year. Flipkart Fashion (Myntra and Jabong) accounted for nearly a third of gross sales for the e-commerce firm in the September quarter.

Bansal, who is more focused on working with Myntra and PhonePe, also said that the Unified Payment Interface (UPI)-based payments wallet PhonePe -- which Flipkart bought in April this year -- will be "integrated with Flipkart soon."

The launch of PhonePe will also help Flipkart take on other e-wallet biggies like Paytm, FreeCharge, MobiKwik for a piece of India's digital payments.


Flipkart Pvt. Ltd, the Singapore-based holding company of India's largest e-commerce marketplace, reported a wider loss for 2015-16 as it spent more to hold off growing competition from the local unit of Amazon.com Inc. The company posted a net loss of Rs 5,768.8 crore for the year through March 2016, up 86% from a year earlier. It was reportedly in talks with Wal-Mart Stores Inc, the world's largest retailer and Canadian pension fund CPPIB.

While, Amazon India's losses for the fiscal year ended March 2016 soared to Rs 3,572 crore from Rs 1,724 crore in the previous year. The company's revenues jumped to Rs 2,275 crore this year compared with Rs 1,022 crore last year.