Flipkart And Snapdeal’s Big Problem, Explained In 3 Graphs

The dust is now settling on the festive sales season, and mood in e-commerce circles is upbeat. Flipkart, Amazon and Snapdeal have all claimed record numbers, and have seen large spikes in their sales. But as the packages reach happy customers across the country, maybe it’s time to confront the problem that Flipkart and Snapdeal are facing – their growth has all but stagnated.

We’ve been using Google Trends to  analyze data on e-commerce companies, and it’s worked remarkably well so far. Right after the first day of the sales, we’d predicted that Flipkart would have the strongest sale, and this was corroborated later by other outlets when the three companies released their sales numbers. Given Google’s volumes, and the similarity of products sold by the three companies, Google Trends is an effective proxy to judge the relative popularity of the three main e-commerce players.

And it doesn’t paint a pretty picture for Flipkart and Snapdeal. If one looks at searches for “Snapdeal” and “Flipkart” over the last 5 years, we see that searches for the e-commerce companies peaked around 2014 – and have been falling since then.


In 2014, e-commerce in India was flourishing. Money was flowing, discounts were aplenty, and e-commerce companies were growing rapidly.  Searches for Flipkart and Snapdeal rose, and even though both companies were accumulating huge losses, investors weren’t worried. It was okay to make losses as long as you could grow. Amazon, e-commerce’s poster child, had famously followed this approach – it never made profits until quite late in in lifecycle.

But things have changed after that. Since the end of 2014, the average searches for both Flipkart and Snapdeal have gradually slowed. Barring the spikes, which occur during the holiday sales, both Flipkart and Snapdeal are less popular than they were two years ago.

This is in stark contrast to Amazon, the company they both with to emulate. In its early years, Amazon was losing money, like Snapdeal and Flipkart, but it was also growing. Global searches for Amazon grew every year in since 2004.

Over the last 12 years, Amazon’s march has been steady and progressive. If you’re competing with Amazon, this graph is terrifying – in not one year in over a decade has Amazon faltered. It has grown year on year, every year.

This is precisely the reason why Amazon can afford to make losses, and its share price still keeps rising. It may be losing money, but it’s growing, and will one day eventually command the market. Like Amazon, Snapdeal and Flipkart are also making losses, but far from growing, their popularity has shrunk over the last two years.

Since 2014, as searches for Snapdeal and Flipkart in India fell, Amazon’s searches in India rose. As the homegrown companies watched, Amazon rapidly ate into their market share. Things changed so quickly, that Amazon is neck-and-neck with Flipkart, and Snapdeal is now a distant third.

And that has investors spooked. Flipkart’s valuation has been repeatedly cut by several mutual funds and investors, and Snapdeal is now clearly lags behind the big two. And what’s perhaps the biggest reason that Flipkart and Snapdeal aren’t growing? It’s the India entry of the company they’d both wished to emulate.

What does that mean for Flipkart and Snapdeal? They’re currently both losing money, and shrinking in popularity. This is clearly unsustainable in the long run. There’s lots riding on these companies – having raised billions of dollars, they can’t afford to stand idly by and watch Amazon take over their space. The one path that remains is mergers and acquisitions – Snapdeal and Flipkart will have to either team up to take on Amazon, or will have big foreign investors buy significant stakes in then. Walmart and Alibaba are already making moves, and both companies have indicated that they aren’t averse to the overtures.

If things go as they are, 2017 could well be the year of consolidation in the Indian e-commerce space.

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