The recent slowdown in funding will likely put some pressure on downrounds in Indian ecommerce companies? valuations, in turn impacting their ability to raise funds. While we acknowledge that Flipkart?s investors -- Naspers/Tiger -- and Snapdeal?s investors --
Softbank/Alibaba -- are well-funded for the foreseeable future, we see the possibility that Amazon could take this opportunity (slowdown in funding) to aggressively move ahead of its Indian peers.
Indeed, Amazon, on its recent earnings call, mentioned that it will continue to heavily invest in India. Such a scenario could lead to Amazon rushing ahead of its peers in overall growth. Recent media articles have suggested that Amazon has overtaken Snapdeal to become India?s second-largest online marketplace when compared on the basis of GMV - Gross merchandise Value.
The top three companies ? Flipkart, Amazon India and Snapdeal -- to move away from discounts to customer retention/repeat usage and improving the overall customer experience. We consider this to be a healthy sign for the industry and expect the discounts to be
reduced, with the focus shifting from GMV to revenue growth.
Unlike China, where the high-end/luxury-market size is large, in India, the opportunity is relatively smaller, as the high-end market size is relatively smaller. While India has a large middle class, consumption by this segment is usually via ?small ticket items?.
