There’s a battle brewing in India among the four King Kongs of e-commerce, one that will hugely impact online retail in the country. Four unicorn companies–Flipkart, Snapdeal, Amazon and Paytm–are duking it out to become the regional leader in a field where the final outcome is far from certain. The King Kongs have armed themselves with billions in funds in this battle for survival. Too bad only one will live.
Flipkart, a Desi startup worth $15 billion, raised $700M in July but had been operating at a burn rate of $50 million per month. Even as investors are pouring hundreds of millions into Flipkart, the company is losing its market share. Stagnation indicates the founders may not be able to scale their company long-term. In fact, Flipkart’s founders have cashed out millions of their shares and are investing in other startups. The captains are abandoning ship and employees are wondering why they aren’t being given a life vest. In a dramatic move to win employee favor, Flipkart recently became the first company in India to sell a stake of its employee trust fund.
Amazon, at the same time, promised to spend $2 billion in India, a number frequently mentioned whenever Flipkart’s future is discussed. While both companies are equipped with sizable resources, Amazon has an unparalleled two-decade advantage on the Indian startups when it comes to building technology and staff. Though Flipkart is hiring high-priced executives from Google, Twitter and the like, this strategy is simply a Band-Aid applied on a far more chronic ailment.
Flipkart, a Desi startup worth $15 billion, raised $700M in July but had been operating at a burn rate of $50 million per month. Even as investors are pouring hundreds of millions into Flipkart, the company is losing its market share. Stagnation indicates the founders may not be able to scale their company long-term. In fact, Flipkart’s founders have cashed out millions of their shares and are investing in other startups. The captains are abandoning ship and employees are wondering why they aren’t being given a life vest. In a dramatic move to win employee favor, Flipkart recently became the first company in India to sell a stake of its employee trust fund.
Snapdeal is burning funds rapidly, they, unlike Flipkart, are actually adding customers every month. It appears Snapdeal has learned how to scale without spending too much per customer. The best measure of a business model, after all, is not how much money the company spends, but how much it accomplishes with the money spent.
The creation of SnapPay will render Flipkart the new underdog in the Indian e-commerce landscape. SnapPay and Amazon will logically seize on this opportunity, flanking Flipkart and squeezing the company out. Tiger Global Management, the current financiers of Flipkart, will face millions in losses every month until they finally acquiesce to market pressures and their limited partners’ demands and sell the business. Flipkart will almost certainly go to Amazon, making the ultimate battle for dominance one between Amazon/Flipkart and SnapPay.
To protect Desi companies like Flipkart from failing. Doing so would eliminate the competitor advantage that is absolutely critical to innovation. These founders and employees have competed against the best in the world and will only go on to do bigger and better things.
To protect Desi companies like Flipkart from failing. Doing so would eliminate the competitor advantage that is absolutely critical to innovation. These founders and employees have competed against the best in the world and will only go on to do bigger and better things.
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