Tuesday 17 January 2017

Amazon shows signs of growth; Flipkart shows signs of a dying business?

Amazon has no plans to slow down as far as its India investments and expansion strategies are concerned.  The US-based ecommerce conglomerate is eager to strengthen its presence in India; even it takes billions of dollars to fuel that growth.  

Expands its 3-party seller service ‘Amazon Service Providers Network’ (ASPN)

Amazon’s ASPN offered 3 services to sellers – imaging, advertising and logistics. Now the seller service has been extended to 10 facilities to help small and medium sellers increase their sales and in turn benefit the marketplace as well. The idea is to promote growth of as many sellers on the platform as possible, so that the FDI directive to not exceed 25% sales bracket from one seller doesn’t affect Amazon’s overall sales volume.
While speaking about the new services added to ASPN, Gopal Pillai, Director & GM – Seller Services, Amazon India said,
“One of the additional services we have launched is the Sponso red Products Optimization (SPO), a pay-per-click model for advertising, similar to Google ad-words, which is open to all sellers. It is a technology product and requires constant keyword optimisations, changing bids for these keywords and reiteration to see what is working and isn’t.”

Amazon India’s team expanding faster than Flipkart

The attrition rate at Flipkart, especially at the top level is very high. In the last two weeks, six head-honchos left the Indian home-grown company.
But Amazon’s India team is expanding. The clear indicator of this is that the company’s office space is 4 times larger than its rival Flipkart. As a per a news report, Amazon India has a sprawling 3.1 million square feet of total office space, whereas Flipkart’s office space stands at 7 lakh square feet.
Amazon’s fulfilment capacity is also larger than Flipkart. In 2016, the American etailer added six fulfillment centres and, increased its storage capacity to almost 7.5 million cubic feet across all 27 centres in India. According to Amazon, this is the largest storage capacity and warehouse infrastructure for sellers in India in the ecommerce industry.
As expansion of physical space is sign of growth and long-term plans, it is safe to assume that Amazon is scaling up the ecommerce ladder.

On the other hand, Flipkart showing signs of failure?

No, the Indian etailer isn’t shutting shop. Not anytime soon, at least. But Binny Bansal being replaced by Kalyan Krishnamurthy has given rise to rumours that Flipkart is on the verge of breaking down.
Buzz is that investor Tiger Global’s former executive Krishnamurthy was roped in to improve Flipkart’s health before the ‘on sale’ tag is attached to it. While some say that it is prep-work for impending IPO.
Both the co-founders Sachin and Binny Bansal had to give up their CEO position, owing to poor performance. Experts suggest that if an investor has to get involved in daily operations of a company then it is a clear sign of trouble, like it happened in case of Flipkart.
Whether Flipkart goes on sale or prepares for an IPO, we’ll hopefully know that in 2017. But the appointment of new CEO and constant devaluations indicate that investors have lost faith in the Indian etailer and its founders. Would Amazon gain from this situation?

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