In fiscal 2015, according to Kotak Institutional Equities Research, 22 e-commerce businesses ran up over $1.2 billion in red ink — with Flipkart leading the way. In recent months, it has become harder for Indian startups to raise money. In February, Chinese e-commerce giant Alibaba Group Holding Ltd. was reportedly mulling an investment in Flipkart that foundered because the Indian company refused to accept a lower valuation.
If true, this is fascinating. I always was under the impression that Alibaba would invest in Flipkart and other Indian companies in parts to combat Amazon, a global competitor to Alibaba, in a proxy war; and in the process building up stakes in potential market leaders in the only market capable of competing with the Chinese market on scope. Either, the founders of Flipkart, knowing this as well, are trying to poker (too) high, or Alibaba is not as determined as I thought. This is something to keep an eye on.
In the mean time, a price war in India has begun:
In a sign of the battle to come, the Seattle giant cut the commissions it charges third-party merchants in India by as much as 7 percent in some categories; only days earlier Flipkart, keen to stanch losses, had done the opposite, boosting its own commissions by 5 to 6 percent. Meanwhile, Amazon has just added five fulfilment centres in India including its largest one outside Delhi, has added 100,000 sellers on its platform to Flipkart’s 90,000 and built a lead over its rival in website traffic.
According to a report at Factor Daily, Amazon is readying to bring its video weapon to India, again unsurprisingly:
Amazon Inc. has started talks with Bollywood producers and other independent production houses in India for building its local video streaming content play as part of the Amazon Prime launch later this year.
According to at least six people including some producers currently in talks with Amazon, the company is committing up to $300 million in funding movies and series ideas, part of the $3 billion fresh funding war chest CEO Jeff Bezos announced for India in June this year.
Combined with the imminent arrival of Amazon Prime in India, the fight for the Indian market is only going to get more intense.
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