Sunday 24 May 2015

Flipkart has biggest piece of Indian e-tail pie.

The market share of e-commerce companies has so far been a confidential matter, but a new report by Morgan Stanley suggests a pecking order. While Flipkart, founded by Sachin Bansal and Binny Bansal as an online book retailer in 2007, tops with 44 per cent, younger rival Snapdeal is a close second at 32 per cent. US giant Amazon, which launched in India in 2013, is a distant third, at 15 per cent, according to the report. The remaining nine per cent is with the rest of the companies, whom the report does not name.

The report notes fashion as a segment constitutes 30 per cent of India's e-commerce market. In fact, Flipkart's fashion offering got stronger after it acquired Myntra in a $300-million deal last May. Snapdeal, chasing Flipkart, recently acquired luxury fashion portal Exclusively, indicating the significance of fashion in e-commerce. Snapdeal is expected to close half a dozen more acquisitions this year at an estimated $1 billion.

Before the Myntra deal, most of Flipkart's business came from consumer electronics and other categories. Consumer electronics is still a major play for Flipkart, but Myntra's fashion business has given a boost to India's highest valued e-commerce company's market share.

"For Flipkart, the key differentiator has been Myntra as it was a perfect acquisition target. Myntra is horizontal in the fashion space and a value-driven business,'' said Mohit Bahl of KPMG India. In the case of Snapdeal, the acquisition of Exclusively is just the beginning in that direction, Bahl added.

Fashion has been the highest margin segment for e-commerce companies. According to experts, bigger companies would have to acquire smaller ones in a segment as niche as fashion.

The e-commerce market is expected to be pegged at $100 billion by 2020 from about $3 billion in 2013, with a reach of less than a per cent.

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