When giants sneeze, others catch a cold. As Amazon and Alibaba battles for dominance in the global e-commerce market, Indian rival Flipkart had to keep pace or see its market eroded by the giants.

Reference: Microsoft, eBay, Tencent Invest US$1.4 Billion in Amazon’s India Rival by Wall Street Journal dated 10 April 2017

Key Summary:
Earlier today, the Indian startup raised a whopping US$1.4 billion from Microsoft, eBay and Tencent. India is one of the largest untapped mobile e-commerce market. Therein lies its appeal to the different e-commerce players. By 2019, mobile phone usage will hit 813.2 million, says eMarketer, up from 684.1 million in 2016.

Our insights into this deal:

  1. India is turning out to be a proxy e-commerce and cloud services battlefield for Amazon, Alibaba, Microsoft, Tencent and eBay. For Microsoft, it is likely offering Azure cloud services to combat AWS. Tencent  – which has a close relationship with China’s ecommerce mall JD.com – and eBay also have cause to shore up Flipkart against Alibaba and Amazon. This opens the door for JD.com, China’s second largest ecommerce player, to possibly “enter” India through  Flipkart to fight Alibaba there. This will turn India the largest open ecommerce market unlike China.
  2. This deal could push Alibaba Group to do more. There’s a three-cornered fight featuring Amazon, Alibaba Group, Tencent and eBay via Flipkart. This might force Indian payment and commerce startup Paytm, 40% owned by Alibaba – to acquire Indian e-commerce portal Snapdeal.
  3. With US$1.4B financing, it is likely that Flipkart can use part of the funds raised to acquire Snapdeal, which is rumored to be in the works. However, the visions between founders of Flipkart and Snapdeal are not aligned. Given that Snapdeal and Paytm share Alibaba Group and SoftBank as common investors, there can exist another scenario where Paytm might acquire Snapdeal given the synergies of both companies.

You can subscribe to our insights by joining our mailing list here.