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While Flipkart and Ola continue to burn billions of rupees to stay afloat amid intense competition from Amazon and Uber, their CEOs Sachin Bansal and Bhavish Aggarwal seem to be taking the easier route.
Instead of taking the competition head-on through innovation and efficiency, they are crying foul about unlevelled playing fields created by the deep pockets of “foreign” players.
US-based hedge fund Tiger Global is the largest shareholder in Flipkart with 30% shares. In Ola’s case, Japan-based Softbank is its largest shareholder with around 22.5% shares, and Tiger Global is its second largest shareholder with around 20%.
When (copy) cats try to roar, it sounds awkwardly funny
Flipkart copied Amazon’s deep discounting model. Ola is just another taxi hailing app like Uber and Didi and relies on the same model to entice consumers onto its platform. Thus, Bhavish Aggarwal’s comment that “the fight is on the capital side but not on innovation. Capital has become the main product differentiator” sounds outright naive.
In the process, for the financial year, which ended in March 2016, Flipkart reported a loss of more than $340 million versus a loss of $161 million a year ago. Amazon’s losses in India in 2016 could surpass $1 billion. In fact, losses in India hurt Amazon’s international earnings significantly for the September quarter.
All Indian ecommerce players had clamoured to open up the online retail space to foreign capital and now they want restrictions. Protectionism may help these ecommerce giants to improve margins and see richer valuations, but the absence of competition will be a big blow for Indian consumers that have benefitted immensely from economic liberalisation.
