Amazon started as online book store and has grown to be the worlds largest online retailer.
Which marketplace will win in India?
The marketplace world has been watching India with interest and there’s still no clear winner in sight. eBay, Amazon, Walmart and Flipkart are the main players and it’s still no clear what the outcome will be for the marketplaces and who will win in India.
Amazon’s situation appears to be the clearest – they’ve got a marketplace up and running and whilst, at least for the moment, it appears they’ve missed out on joining forces with Flipkart, they’re accelerating their growth fast and are able to make headway whilst the others flounder.
Walmart are the chosen suitor for Flipkart but it’s by no means certain a deal will be easy to finalise. Having put together a consortium, including Google, to put a bid together that has been accepted in principle, Softbank look likely to delay matters.
With a 21% stake in Flipkart, Softbank still have made the final decision to sell their share of the marketplace which means Walmart can’t buy it. According to India’s The Economic Times, Softbank supported Amazon’s bid as they could have been interested in buying more shares in Flipkart but now if they sell there shares they’re in danger of a massive tax bill. It comes down to a Double Taxation Avoidance Agreement which there isn’t one of between India and Jersey where Softbank are located. A Double Taxation Avoidance Agreement avoids paying tax on the same profits in two different territories and that’s a big issue when you’re talking in billions. To avoid Double Taxation Softbank may have to hold on to their shares for another 6 months or so.
Whether the Walmart deal goes ahead or not, it’s likely to be the end of the year before it completes.
eBay are in an invidious situation – they must have seen an upside in partnering with Flipkart and now they’ve torn up the exclusive agreement due to Flipkart selling out. eBay will walk away with a healthy profit and are also ceasing the licensing agreement for Flipkart to use the eBay.in brand and domain.
This is a pain for eBay as it reduces their export to sellers that list on the site, rather than as anticipated from Flipkart’s 100,000-plus sellers, who under the Flipkart Global program would have been enabled to sell across India and to over 171 million active customers of eBay globally. In some ways however, it’s even more of a pain for Flipkart as with eBay pulling the plug on the exclusive agreement they’ll have to wait for Walmart to ramp up and Walmart don’t have anywhere near the global presence of eBay.
eBay will effectively be back where they were in early 2017, albeit with many of their sellers also now signed up to Flipkart but then most sellers would probably have offered their goods on both platforms anyway. What’s not known is how many of eBay’s staff will have moved to new contracts with Flipkart and how long it will take to get a full team in place.
Which marketplace will win in India
So it would appear that eBay in India will have to retrench and regroup following what now turns out to have been a temporary partnership with Flipkart. Walmart are still trying to put a deal together which will take the best part of a year to complete before they can actually do anything. Flipkart just lost their valuable cross border trade partnership with eBay and are unlikely to do much while they’re focused on being acquired by Walmart.
That just leaves Amazon for whom an unsuccessful last minute bid for Flipkart won’t have disrupted their day to day operations and can forge ahead whilst the others regroup. At least in the short term Amazon are the only marketplace without distractions and can make a run to win in India. It would be little surprise if by the time Walmart actually gets their hands on Flipkart that they discover Amazon have overtaken them and Walmart discover they’ve bought the 2nd or 3rd biggest marketplace in India, not the 1st.