Amazon entered the Indian eCommerce space just two years back and the competition is getting spicier day by day. Within two years and $2 billion investment committed last year, Amazon is lining up another $5bn investment for an aggressive expansion in the country. It is clear that Amazon eyes India to be the biggest market outside US. With a cash rich cloud services and the profitable US business to back these plans, Bezos is planning to take up its Indian competitors directly. As per the reports Amazon will be using these investments to increase the warehouses and the data centres for India operations.

None of the eCommerce companies in India has produced profitable results till now. A recent report in the Businessworld magazine said Flipkart losses Rs 2.23 for every rupee it earns, Amazon was Rs 1.90, and Snapdeal Rs 1.72.

The report further said, citing data from Accounting and Corporate Regulatory Authority (ACRA), Singapore, that Flipkart’s loses had widened to Rs 1,028.9 crore in FY14 from Rs 544 crore a year earlier. Its turnover in FY14 stood at Rs 2,937.7 crore. Snapdeal, meanwhile, incurred losses of Rs 530 crore.

All the three companies have spent Rs 9,774 crore on discounting and reverse logistics in the last financial year, the BW report said. Reverse logistics is the transportation of goods that are rejected by customers back to the company’s warehouses. Discounting and reverse logistics are the two major strategies of these companies to woo customers. A UBS report recently said Indian e-commerce companies will have to continue burning cash until 2020, when they are likely to turn profitable.

But despite all these, the Indian e-commerce industry continues to be a very attractive bet. The reason is the huge potential. According to UBS, the market will grow to $50 billion by 2020. UBS estimates that the India etail market could be worth $ 50 billion by 2020, growing 10x from the current level.

Amazon vs Flipkart

Amazon leads the festival shopping

Amazon is catching up with its rivals in India at a rate faster than expected. Between July 29 and October 26 this year, the total number of Amazon app downloads was 8.1 million, just a million less than Flipkart’s 9 million, according to mobile app data analytics platform App Annie.

Internet usage analytics firm SimilarWeb also finds Amazon making rapid strides in the 28 days of October. While Flipkart’s overall installed app base during this period went up from 35% of all phones to 38%, Amazon’s moved up from 11% to 19%. The data from the same website also shows that Amazon’s overall daily active users during this period went up from 1% to 5% (of the installed base), while that of Flipkart moved up from 5% to 7%.

Website ranking (SimilarWeb) of Amazon India and Flipkart:

Ranking

Japanese investment bank Nomura’s India internet report released last week says that in App Annie’s composite app ranking over the last month, Flipkart’s app ranking in India moved up 10 positions to No. 1, while Amazon India’s ranking moved up 16 positions to No. 2, and Snapdeal’s ranking moved up 23 positions to No. 4 on the Android platform. The app rankings take into account traffic, engagement, uninstalls, downloads and velocity of downloads, among many other parameters.

Website Traffic Overview

Website Traffic Overview (SimilarWeb) of Amazon & Flipkart

The above figure shows the desktop traffic over the last six months. Amazon is catching up with Flipkart on desktop with 73M visits in September 2015 compared to 84M for Flipkart. The difference is coming down month on month. In april Amazon traffic was 53M on desktop compared to 74M for Flipkart.

On the web — desktop and mobile — data from multiple tracking agencies, including comScore, SimilarWeb, Alexa (owned by Amazon), show that Amazon is very close to Flipkart in terms of traffic and unique visitors. Flipkart still has a substantial lead in page views, but a consumer survey done with 15,000 people over e-mail and phone by Etailing India, an e-commerce analysis firm, shows that Amazon has greater consumer stickiness than Flipkart.

Which one do you prefer and why?

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