Etail giants like Snapdeal, Amazon lose market share in 2015; small etailers emerge as real winners


February 26, 2016

Richa Maheshwari, The Economic Times
Bengaluru, 26 February 2016

Snapdeal and Amazon India lost market share in 2015, according to the research arm of Morgan Stanley, as online shopping options grew rapidly in India and established etailers cut back on discounts. But Flipkart managed to marginally increase its share and the Big Three, despite a fall in combined market share, accounted for more than 80% of the total market.
A Morgan Stanley research report released earlier this month pegged Snapdeal’s and Amazon India’s market share in terms of gross merchandise value at 26% and 12%, respectively, in 2015. A similar report published by the same firm last year had estimated the shares of these two companies at 32% and 15%, respectively, for 2014.
While Flipkart maintained its number one slot and increased its share from 44% to 45%, the combined market share of India’s top three ecommerce companies fell from 91% to 83%. Paytm remained steady with 7% market share. The real gainers were small and more-focussed online retailers who saw a jump from 2% to 10%.

Industry watchers said unlike China that is dominated by a handful of ecommerce giants, India’s online shopping market will grow in a ‘more democratic’ manner, like it has in Europe. “Our market will not be like China where you have a few big players like Alibaba, Tmall and India will go more the Europe way with many vertical players,” said Nitin Chhabra, CEO of Bengaluru-based ecommerce consultancy firm Ace Turtle.

“Verticals players such as Urban Ladder and Zivame have started nibbling at market shares. India will be far more democratic than China where it is just few big players,” said Chhabra. “This is a healthy sign for the ecommerce industry in India,” said Arvind Singhal, managing director at Technopak, adding, “As the ecommerce space is seeing multiple startups coming in along with several brickand-mortar players, it will be unrealistic to expect them (Flipkart, Snapdeal and Amazon India) to increase market share.”

Experts also believe that leading players might be losing share because of the gradual reduction in discounts. “In 2015, companies started looking at improving margins. As a result customers have started exploring other portals in search of discounts,” said Devangshu Dutta, CEO at Third Eyesight.

Snapdeal said it has one million daily transacting users on its ecosystem, which is more than both Amazon and Flipkart put together.

“This robust and growing user base and frequency of usage are the key metrics to evaluate long-term growth trajectory of businesses like ours. We are working towards our stated goal of having 20 million daily transacting users by 2020,” said a Snapdeal spokesperson in an emailed response.

Amazon challenged the findings of the report. “The report does not reflect what we are actually seeing on the ground as we are growing significantly faster than the growth rates of the ecommerce industry in India and other mentions in the report. We have previously announced that Diwali 2015 was four times bigger than Diwali 2014 and we sold more in Q4 2015 than we did in the entire previous year (2014),” said the company spokesperson.

Flipkart said it would continue to invest in technology and supply chain, and will focus on consolidating its position in the coming years, “We believe that keeping customers at the core of our business and our relentless focus on customer experience has enabled us to earn the trust and faith of millions of customers across the country,” said a Flipkart spokesperson.

(Published in The Economic Times)