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Flipkart outpaces Amazon India in June sales

LiveMint logoLiveMint 25-07-2017 Mihir Dalal

Bengaluru: India’s largest online retailer Flipkart has consistently nudged ahead of rival Amazon India in monthly sales this year even as the e-commerce market again grew at a sluggish pace in the quarter ended 30 June.

In June, Flipkart Internet Pvt. Ltd reported monthly gross sales of more than Rs2,600 crore, three people familiar with the matter said. That compares with gross sales at Amazon India (Amazon Seller Services Pvt. Ltd) of more than Rs2,400 crore, two other people familiar with the company’s numbers said.

In May too, Flipkart had reported slightly higher gross sales than Amazon on the back of its Big 10 sale (which makes a reference to Flipkart turning 10), the first three people said, requesting anonymity. Including its fashion units Myntra and Jabong, Flipkart was far ahead of Amazon in the last quarter.

While both Flipkart and Amazon have been reporting strong sales growth, the online retail market in India continues to struggle. In the June quarter, shoppers bought goods worth $15.5 billion on an annualised basis, according to RedSeer Management Consulting Pvt. Ltd. That implies growth of just 5% from the March quarter, and an increase of 19% from the year-ago period, RedSeer data shows. This was despite the heavily advertised sales events that Amazon and Flipkart held in May.

Both Flipkart and Amazon numbers indicate the companies are growing faster than the e-commerce market, implying that they are taking a large market share from rivals such as Snapdeal, which has seen sales collapse because of a funding crunch.

Amazon India did not comment on its gross sales but said the company was growing faster than the market.

“We continued to see high growth momentum in the quarter, majorly driven by some big brand launches, the tremendous success of the Great Indian Sale in May and continued expansion and reach in India, with 80% of new customers in the quarter coming from lower- tier geographies. We track independent third parties that measure customer visits and app behaviour metrics and note that we continue to grow ahead of the market. We are delighted and humbled by the trust from our customers, to lead in India on things that matter to our customers in just four years of our business, while continuing to innovate for India and introduce new offerings,” an Amazon India spokeswoman said in a statement.

Flipkart did not respond to requests for comment.

After a year-long struggle, Flipkart sales have bounced back starting last October, driven primarily by demand for smartphones.

Since then, under new chief executive Kalyan Krishnamurthy, Flipkart has consistently bagged lucrative smartphone deals with brands like Motorola, Xiaomi and others. Smartphones now account for 60-65% of Flipkart’s gross sales in some months.

While smartphones are the largest product category at Amazon India too, the company’s sales mix is more evenly distributed than Flipkart’s. Amazon India generates significantly higher sales than Flipkart in smaller categories such as books, groceries and electronic accessories, reflecting the difference in their strategies.

Flipkart’s primary focus is on selling higher-value categories: Smartphones, televisions, refrigerators and fashion; it will launch groceries and furniture later this year.

Amazon, on the other hand, is attempting to make shopping on its platform a habit for customers by attempting to sell a wide variety of products, even low-value ones.

However, both companies will struggle to justify their high levels of spending if the e-commerce market continues to grow slowly. Last year, the market, which analysts expected would grow to anywhere between $50-120 billion by 2020, expanded by less than 15%.

The first two quarters of this year indicate that 15-20% is the new normal growth rate, which means that analysts, investors and companies have all significantly over-estimated the pace at which India’s e-commerce market will expand.

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