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Flipkart Vs Amazon: A Battle for the Multibillion Dollar Indian E-commerce Market

 8 min read / 

With a total internet user base of about 450 million people, which currently amounts to 40% of the total population, India has become one of the hottest destinations for online startups. It is one of fastest growing e-commerce markets, adding more than 6 million users every month.

When it comes to the compound annual growth rate (CAGR) for e-commerce, India sits in 2nd place at 23 percent. This is why everyone is eyeing to capture this multibillion dollar market with large firms like Amazon and local players like Flipkart going at each other to take the helm.

It all started in 2012 when Amazon started to test the Indian waters. However, the ecommerce sector by that time was already buzzing with local players such as Flipkart, Snapdeal, Paytm, Myntra, Jabong, eBay India, etc.

After half a decade, the Indian e-commerce market, in which five to six players gunning for the top spot earlier, has now merged to become a two-way battle. Today, when one talks about the Indian e-commerce market, there are just two names that come to mind – Amazon and Flipkart.

The Battle So Far

Amazon entered the Indian ecommerce sector late around 2012 with the launch of By that time, the market was already captured by several local players. Flipkart, which already had a head start of 5 years over Amazon was doing well, and several other players like Paytm and Snapdeal (both launched in 2010) were also growing staggeringly.

In June 2013, Amazon launched a marketplace model in India. Many thought that Amazon would face the same fate like it did in China, but the American giant was adamant of not losing this crucial market. Jeff Bezos was overlooking this key market personally and even appointed Amit Aggarwal as the country head.

With the arrival of Amazon, Flipkart knew it could not sit still and prompted its investors to raise funds in order to ward off the competition and keep Amazon at bay.


Before Amazon had put its foot in India, the e-commerce sector was garnering huge investments. By the end of 2011, around $350m had been poured into 40 Indian e-commerce startups. Two years prior to it, that number stood only at $43m invested into 11 start-ups.

But when Amazon ventured into the Indian market, everybody knew the market was set to explode. Amazon had deep pockets and Jeff Bezos had explicitly mentioned his intentions to capture this crucial market.

Before 2012, Flipkart has just raised funds three times $1m (2009), $10m  (June 2010) and $20m (June 2011). When Amazon announced, Flipkart raised a whopping $225m in August 2012. It was ready with its arsenal to take on Amazon as well as ward off other local ecommerce players. Flipkart also acquired (Indian e-retailer in electronics) in 2012 for $25m.


In 2013, Flipkart raised funds twice – in July and October. Next year in 2014, it acquired Myntra in an estimated $310m deal, after raising $210m more in May 2014. Flipkart at that time was valued at $5bn and was aiming towards being a $100bn company.

Three months later in August 2014, Flipkart announced that it received a major investment of $1bn. The next day Amazon announced it would invest $2bn in its Indian arm. A few months later, in December 2014, Flipkart again raised $700m and reached a valuation of $11bn. Overall in 2014, Flipkart had raised $1.91bn, almost matching the investment of Amazon during the same period.


In July 2015, Flipkart again went back to its investors and raised another $700m, valuing the company at $15bn. This was the time when Flipkart was facing heat from Amazon as the latter showed prominent growth in the last couple of years. Many thought that Flipkart had a huge war chest as it had raised estimated $3.2bn.

Snapdeal, which was a distant third player in this fight, had mobilized around $1.5bn up till this date. There were several speculations that the e-commerce market in India had reached its inflection point, with so much money being invested.

The next year in June 2016, when Jeff Bezos personally visited India, Amazon gave everyone a shock (especially Flipkart), upon its announcement that it would invest an additional $3bn in India.

With Amazon already closing the gap between itself and Flipkart, this investment gave a huge boost to the company. A month later, Flipkart’s Myntra acquired Jabong for $70m. But by now, Amazon was breathing down the neck of Flipkart in a close second place.


In April 2017, eBay decided to sell its online business to Flipkart in exchange for an equity stake in the company. Flipkart also managed to raise the much needed $1.4bn from eBay, Microsoft, and Tencent, taking its total investment to $4.4bn.

Soon, Flipkart started to eye Snapdeal for acquisition, which would help it take on Amazon. But the deal did not go through and the primary investors of Snapdeal jumped ship and invested $2.4bn into Flipkart in August 2017.

This cat and mouse game between Amazon and Flipkart has likely given technology pundits a heart attack with billions of dollars getting pumped into Indian e-commerce sector.

The Problem of the Burn Rate

One of the biggest reasons behind so much investment in this sector is the burn rate of both the companies. In order to capture the market from each other, both e-commerce marketplaces have been burning a lot of cash on customer acquisition by doling out discounts and offers.

Flipkart has had a huge problem with the burn rate, which is why it had to return to its investors time and again. The latest funding will give Flipkart a leeway of another two years at the current burn rate. However, the company has said to cut down its burn rate by almost 50%, which would mean fewer discounts and offers. Amazon has already been poaching customers from Flipkart by offering lower prices across several categories, which has been hurting the company’s revenues.

Wooing customers with seasonal discount sales

Discounts and seasonal offers are a core part of the e-commerce industry, and both the players have been going big on their seasonal discount offers with Flipkart having its “big billion days” and Amazon with its “The Great Indian Sale”.

Other than these mainstream events, both e-commerce marketplaces also run several other sales simultaneously in order to increase their GMV (gross merchandise volume). The first few years of these promotional campaigns went through the roof with sales surpassing the expectations of both marketplaces. Flipkart has been able to outsell Amazon last year during the seasonal sale. However as the discounts dry up and the race towards profitability is increasing, these festive sales are slowly losing their sheen.

Shift in Focus

If both the companies stop fighting over predatory pricing, it will all boil down to unique offerings and exclusives. Both of them have been busy on that aspect by signing a deal with manufacturers (mainly mobile phone companies) for exclusives.

Additionally, customer support and deliveries are other major points in the e-commerce sector that decide customer retention in the long run. Amazon has been excelling in this aspect by a huge margin, by offering stellar customer support. Flipkart has also invested substantially in its logistics arm, e-kart, to offer timely deliveries.

The Future

With the combined funding of over $12bn, both these e-commerce marketplaces have deep pockets. At the current burn rate, both Amazon and Flipkart can go another two years without the need for another round of investments. However, many experts are of the opinion that the rate that Amazon is growing its market share indicates it will surpass Flipkart. But that will not happen until by the end of 2019, at least.

In the e-commerce sector, 2-3 years is a long time and with the way things are shaking up between the two, nothing can be said for certain. Both will have to look into tweaking their revenue model in order to minimise their losses and attain profitability.

Another thing that is going against Flipkart is its huge baggage, which it has accumulated over the years in order to compete with Amazon. While Amazon has a single ecommerce marketplace, Flipkart, it has several acquisitions like Myntra, Jabong and eBay India to manage. This will most definitely put a burden on its resources.

Snapdeal, which is sitting at a distant third, is said to have downsized itself after rejecting the bid from Flipkart. Now Paytm, which is being backed by Alibaba, is trying to capture third place. The next two years will be crucial for both FlipKart and Amazon as it will be decided in that period who will become the king of e-commerce in India.

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