India’s e-commerce players square off as festival season kicks in

Commuters sit at a bus stop adorned with an advertisement of Indian online marketplace Snapdeal featuring Bollywood actor Aamir Khan, in Bengaluru, October 15, 2015. REUTERS/Abhishek Chinnappa/Files

MUMBAI (Reuters) – India’s two largest e-commerce players, Flipkart and Snapdeal, are looking to use the country’s biggest festive sales season this week to bolster their valuations as they seek fresh capital and look to fend off Amazon’s growing inroads into the domestic market.

For Flipkart and Snapdeal, strong sales during India’s equivalent of the US Black Friday sales could give both companies some leverage in their current push for investment.

With private equity money flows drying up and Amazon.com pledging $5 billion investment to gain ground in India, local e-commerce vendors will be looking to use this season’s numbers to show investors their ability to drive sales.

Flipkart is currently in talks with retail giant Wal-Mart Stores and a strong showing of sales during this week could give it more negotiating leverage. Snapdeal is also preparing to raise fresh capital to defend its turf.

The high stakes battle between Flipkart’s Big Billion Day sales bonanza, Amazon’s Great Indian Festival sale and Snapdeal’s own initiative dubbed the Unbox Diwali Sale, means employees at all three players are working marathon hours to meet stiff sales targets.

“Our teams are working around the clock during Big Billion Days,” said a spokesperson for Flipkart, adding that many are camping out in office for the week, and working 14-18 hour days in a bid to keep up with frenzied demand.

All three companies say their sales seasons have so far been successful, but did not comment on how the sales momentum is stacking up against their own internal targets.

Flipkart says it sold 2.25 million units in the first 12 hours of its 5-day sale, which kicked off on Sunday.

Its closest competitor Amazon India said it sold 1.5 million units in the first 12 hours of its sale that began on Saturday. Amazon said its first day of sales was three times higher than the corresponding first day sales last year while second day sales were five times higher.

Snapdeal said more than 2 million users logged in on the first hour of its sales, leading to more than 180 orders per second at launch.

“With companies under pressure to make money, they don’t want to let the opportunity go to a competitor…you can’t keep burning cash by offering huge discounts,” said Devangshu Dutta, chief executive of retail consultancy Third Eyesight.

(Reporting by Promit Mukherjee; Editing by Sam Holmes)

Be the first to comment

What do you think?

This site uses Akismet to reduce spam. Learn how your comment data is processed.