With Amazon Launching Prime In India, Can Flipkart Stay ‘First’?

Less than a month later, on 26 July 2016, Amazon launched Amazon Prime in India. After a free trial period of 60 days, customers would be able to sign up for what it calls a “special, introductory price” of Rs. 499 a year. Prime Video was not included in Prime at the time of launch.

Unlike Prime, which Amazon founder Jeff Bezos called one of the three bold bets Amazon had made (“AWS, Marketplace and Prime are all examples of bold bets at Amazon that worked” — is what Bezos wrote in a letter to shareholders), Flipkart has let First become one of many initiatives it has launched, and failed to pursue with any meaningful degree of commitment or focus.

Flipkart launched its e-book store, Flyte, in November 2012, almost a year before Amazon launched operations in India and more than a year before Amazon launched Kindle in India. Yet, Flipkart shuttered its e-book store in late 2015, citing e-books as not a “strategic fit.” The same was the story with its digital music business, which it started in 2012 and shuttered in June 2013.

Flipkart continues to lose in its battle against Amazon. It has suffered a steep erosion in its valuations. Amazon is gaining market share faster than Flipkart, and now even the battle of perceptions is being won by Amazon. Flipkart seems to have fallen into a predictable pattern of making a series of flashy announcements, and not following up to make any of them a success.

After publishing this, later that day came news that Flipkart-owned fashion e-tailer Myntra had agreed to buy Jabong in an all-cash deal for $70 million. Jabong had been valued at over $500 million in 2013. The takeaways from this acquisition can be summed up as follows:

First, Flipkart seems to be in the thought mode that it can fight off Amazon by retreating to a few select niches like fashion e-tailing that will give it some sort of a competitive advantage over the U.S. behemoth.

Second, this is in many ways a reaffirmation of Flipkart’s “retreat” mentality, since they have retreated from e-books and digital music already. Amazon, on the other hand, believes in getting into every single segment that a customer spends money on. Witness its move into the office supplies market in the U.S. or into the home services market (estimated at between $400 billion to $800 billion a year in the U.S.).

Third, valuations mean little or nothing for non-listed companies. Jabong was valued at over $500 million in 2013; it was seeking to sell itself to Amazon India for $1 billion in 2014, could not find buyers even at $100 million earlier in 2016, and finally sold itself for seven percent of its asking price. Flipkart would do well to understand the implications of valuations for itself. Denialism is not a strategy.

Fourth, Flipkart has been in the news for all the wrong reasons —  for its penchant of helicoptering executives from Silicon Valley at million-dollar salaries, for high-profile executives, for valuation missteps, and more. Missing in all this is a laser-like focus on execution. If it wants to learn anything from Amazon, it should be this.

Will Flipkart step up?

Flipkart: Million-Dollar Hiring Mistakes Translate Into Billion-Dollar Valuation Erosions (April 15, 2016)

Flipkart, Focus and Free Advice (June 27, 2015)

Flipkart vs Amazon: Beware the Whispering Death (April 20, 2015)

Why Flipkart seems to be losing focus (April 12, 2015)

Exhibit 99.1, Letter to Amazon shareholder

This piece was originally published here and has been republished with permission.