As we have mentioned a few times before, the current state of Indian online marketplaces is like that of a three way game of chicken, with Flipkart, Amazon and Snapdeal vying for the top market share. But that is not the complete picture. Indian online retail has come a long way from its meagre beginnings, in a span of less than a decade. It has transitioned into becoming an ecosystem that sustains not just the big billion companies, but also niche marketplaces that specialize in specific products and services. Then there is also the offline part of online retail – logistics providers, wholesalers, warehouses, transportation – the growth of the online retail industry has impacted each of these sister industries.

A few weeks ago, Livemint published an article talking about the wide variance in estimates of the online retail market size by 2020 by some of the most renowned agencies. While Morgan-Stanley estimates the market size up to $120 billion in 2020, the UBS Group puts this number to $48-60 billion. How to account for this huge discrepancy in estimates? One thing that it tells us is that the Indian online retail market is still volatile and highly dependent on the rate of internet penetration in India. For example, the entry of Reliance Jio in the Indian market is supposed to reflect positively for the online retail figures in India. With all this in mind, online retail marketplaces in India have to face a difficult question – with a market that is endowed with such a wide range of unpredictability, how to make steady growth?

Fresh Rounds of Funding

With the year end approaching, Indian online marketplaces will look for fresh injections of capital to prepare themselves for the next year. Already, Flipkart is looking to raise $1 billion, while Amazon India has to route the $3 billion that it received from its parent company earlier this year in June. All three companies will have to find ways to fill up their coffers, since the dominant strategy in the upper echelons of the market seems to be to bleed cash into marketing budgets and competitive pricing. Indian online retail marketplaces will have to figure out new ways to acquire and retain capital, since they seem to be locked in a battle of sustenance.

Where to Spend the Money?

The biggest question for the online retail marketplace is where to spend the money? Up until now, the answer has been aggressive marketing budgets that take over everything from TV, billboards, newspapers and social media, to competitive pricing strategies and flash sales to jerk the sales margin into the desired bracket. As Amazon India’s Country Manager Amit Agarwal said in an interview with Mint, Amazon’s main focus with the new cash injection from its parent company will be on making its supply chain more efficient. B

y reducing the seller’s cost in warehousing and delivery of the product, lower prices can be offered to the customers. By focusing on programs like Fulfilment by Amazon or Flipkart Advantage, the online marketplaces can work on removing bottlenecks on a grassroot level.

Getting Ready for New Entrants in the Market

As we discussed in a previous article, all eyes are on the Indian online retail market, especially after the Government approved 100% FDI on marketplaces in India earlier this year. We discussed the possibility of the Chinese e-commerce giant Alibaba entering the Indian market, but there might be other interested parties too. – Alibaba’s biggest competitor in China, the Japanese online retail Rakuten have all shown interest in the Indian market. In fact, Flipkart’s next big investor might be none other than Wal-mart. The current players in the market will have to think about these factors while strategizing for the future.

Big Billion Days and Sales

As the numbers of this year’s sale season are being reported, it is no surprise that they have surpassed those posted last year. Flipkart has sold more than 15.5 million units while making sales worth Rs. 3000 crore. Amazon has clocked in second by selling around 15 million units, while Snapdeal has touched its target by selling products worth Rs. 500-600 crore. More in-depth analyses of this year’s sale season will follow, but there already seems improvement in terms of handling website traffic, customer grievances, etc. At the same time, there is a long way to go to reach the likes of, which consistently has been orchestrating record-breaking sale days in China for years now.

The next few years are poised to bring new problems and new opportunities to the Indian online retail market. The marketplaces will have to learn from their mistakes and be ready to think creatively and push their comfort zone. To know more, get in touch with Browntape. We are India’s leading ecommerce experts, and we are always happy to help!

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