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India: the new online battleground

India: the new online battleground

Like any self-respecting mega mogul billionaire these days, Amazon’s Jeff Bezos has his eyes set firmly on the skies. Or more accurately, outer space and beyond.

Along with Elon Musk’s SpaceX project, Bezos is chasing the dream of putting humans on another planet – possibly with internet access good enough to enable them to keep shopping through Amazon too.

He’s putting something like US$1 billion a year behind his Blue Origin space flight project, with the bulk of that money coming from his online shopping empire.

However, matters of a more earthly nature may conspire to ground his space travel dream.

India’s Flipkart is getting ready to join the global battle for online commerce, having just raised US$1.4 billion from big name investors including Microsoft, Tencent and eBay.

Founded in 2007, Flipkart is the biggest e-commerce company in India.
Founded in 2007, Flipkart is the biggest e-commerce company in India.

Already firmly established in the booming Indian marketplace, Flipkart could leverage the massive potential of its Indian base to stifle Amazon’s plans to dominate online shopping on the subcontinent.

It’s boom times in India, with the World Economic Forum reporting India has surpassed China as the world’s fastest-growing economy and is set to have a bigger population than China by 2022. The Indian middle class is estimated to have grown from 300 million in 2004 to 600 million in 2012.

Aside from being eminently qualified for their roles, both Google and Microsoft’s relatively recent CEO appointments were born and raised in India. With China proving a tough nut to crack for Western companies, focus has shifted to what can be achieved in India.

Just as Alibaba is proving to be a more than worthy combatant for Amazon in China and South East Asia, so too Flipkart promises to make life difficult for Amazon in the potentially enormous Indian and broader South Asian markets.

Alibaba is proving to be a more than worthy combatant for Amazon in China & SEA.
Alibaba is proving to be a more than worthy combatant in China & SEA.

Interestingly, one of Alibaba’s biggest competitors for the Chinese online commerce market is Tencent, which is one of the partner investors in this latest $1.4 billion funding round for Flipkart.

So who is Flipkart? Founded in 2007, it’s the biggest e-commerce company in India, and it was started by two former Amazon employees, Sachin Bansal and Binny Bansal. It has reach, recognition and trust – three very important factors for an online shopping destination – which is why the likes of Microsoft are so keen to become partners.

Amazon has massive plans for India, as one of its top executives, Diego Piacentini, told Fortune Magazine two years ago when Amazon was starting to build its presence in the country: “The size of opportunity is so large it will be measured in trillions, not billions – trillions of dollars, that is, not rupees,”

This leaves Amazon with head-to-head fights with big, cashed up players in India and China, while trying to find expansion and growth in smaller developed markets such as Australia, often also against local, established incumbents.

With China proving possibly too difficult to crack, India is shaping up as the next big battleground for online commerce.

And Amazon needs big new markets if Bezos wants to keep funding his interstellar vision.

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