It’s the million dollar question – or perhaps the 15 billion dollar question. Over this year, funds and investors have repeatedly snipped Flipkart’s valuation from its high of $15 billion in July 2015. Flipkart’s been facing a slew of challenges – e-commerce growth in India is slowing, there’s a general bleakness in the funding scene, and the company is battling its own set of leadership challenges.
But there’s probably a bigger reason why investors are bearish on Flipkart. It’s Amazon.
Now there are conflicting reports about how the two companies are actually doing. GMV, or Gross Merchandise Value numbers are often not revealed by either company, and they’re prone to approximations such as returns and discounts. User surveys have divergent results, and are often commissioned by the firms themselves, making their results suspect. And firms are cagey about people carrying out their own surveys – Flipkart had once initiated legal proceedings against a blogger for using its logo on a simple question on his site which asked users if they preferred Amazon or Flipkart.
But there’s an unbiased source that could give insights into how these firms are really doing – Google.
Google’s search trends can serve as a solid proxy for the mindspace that these firms occupy amongst the general population. These are e-commerce companies after all, and Google is the most popular website on the internet. There’s no reason to assume why searches on Google would diverge very significantly from actual revenues for these firms – Flipkart and Amazon have nearly identical product offerings in India, and have similar brand recall values. Most importantly, the Google search trends confirm what lots of other sources are saying.
This is a chart that shows the relative number of searches for “Flipkart”, “Snapdeal” and “Amazon” over the last five years in India. Flipkart had a sizable lead over Amazon and Snapdeal until 2013. Then Amazon launched, and was neck-to-neck with Snapdeal until late 2015. Since then, things have changed though – Amazon powered onwards, and is currently marginally ahead of Flipkart, while Snapdeal has tapered off.
But what makes this graph even more illuminating is breaking down the searches in India by state. In 2013, before Amazon had launched, Flipkart was the top searched site in all of India, ahead of Snapdeal and Amazon.
In 2014, the map hadn’t changed much. Flipkart still held sway over most of India, apart from tiny Mizoram, which was searching the most for Snapdeal.
In 2015, Snapdeal made further progress – it was the top searched site in Jammu and Kashmir, Uttrakhand, Mizoram and Tripura. Amazon still didn’t feature on the map, though it was making steady progress, climbing towards the other two.
2016 was the breakout year for Amazon. Jeff Bezos flew down and handed India head Amit Agarwal a mandate to spend $2 billion in India. And the impact has been immediate. From being the top searched site in no state in 2016, it’s made a grand entry – it led in a whole 9 states. Snapdeal was ahead in three, and Flipkart led the rest of the country.
But perhaps what’s most startling is the pace at which Amazon is gaining ground. Over the last 90 days, or the months of July, August and September, Amazon was the top searched site in India. It had pushed Flipkart out of most of north, west and south India. Snapdeal had suffered too, and was back to being on top in a couple of north eastern states. India had turned into Amazon’s signature shade of orange.
July, August, September, 2016
The speed and extent of Amazon’s India charge has been exceptional. But it should’ve been expected. Amazon is the world’s biggest e-commerce company, and in global terms dwarfs both Snapdeal and Flipkart. With its 20 years of experience, and $2 billion India warchest, it’s managed to turn things around very quickly in the Indian market. Flipkart and Snapdeal have some serious competition on their hands – they need to act quickly, or this recent surge might just turn into a full-blown rout.