Amazon’s mobile app engagement in India grew 46% year-over-year (YoY) in Q1 2017, while Flipkart, the e-commerce market leader in the country, saw an 12% decline, Quartz India reports.
Amazon accounted for 30.3% of monthly mobile e-commerce users in India last month, putting it almost even with Flipkart’s 30.7% share, according to data research firm 7Park Data cited by Quartz.
This indicates that Amazon, which is investing heavily in India, is a growing threat to struggling Flipkart.
The increased mobile engagement is an extremely positive sign for Amazon as mobile accounts for a large portion of e-commerce in India — around 80% of web traffic for Flipkart and Snapdeal, two of the country’s largest e-commerce platforms, came from their mobile apps and mobile sites last year. Most Indians depend on mobile devices for internet access — 77% of urban Indians, and 92% of rural Indians, say a mobile device provides their primary internet access tool, according to a recently released survey by the Internet and Mobile Association of India. So success in attracting mobile traffic and sales is vital to Amazon’s ambitions in the region.
The e-commerce giant's growth also spells trouble for Flipkart, which has struggled to drive organic growth lately in India’s nascent e-commerce sector. Flipkart’s decline in mobile engagement is a troubling sign, especially given that its unique purchasers only grew 11% over the past year, compared with Amazon’s 113% growth, according to 7Park Data’s study. Flipkart recently acquired eBay’s India business in order to help kickstart sales growth, and it's also reportedly in talks to acquire Snapdeal. Meanwhile, the company has raised new funding and cut its fees for marketplace sellers to help fend off growing competition from Amazon and Alibaba-backed Paytm E-commerce.
Amazon has pledged to pour $5 billion into India, and the investment seems to be paying off. However, e-commerce players in the region still face considerable market hurdles there. Logistics in India is a major concern for these firms because of the country’s outdated transportation infrastructure. Additionally, a massive unbanked population precludes a huge section of Indian consumers from making online payments.
Amazon is trying to overcome the logistics issue by investing heavily in new fulfillment centers in India to help speed up delivery times, and it recently gained a license to offer a digital wallet in India to facilitate online payments. If it can overcome these broad challenges, Amazon seems poised to overtake Flipkart’s lead position in the market.
E-commerce has been on the rise in the last several years, thanks in large part to titans in the industry such as Amazon and Alibaba. E-commerce will truly become the future of retail, as nearly all of the growth in the retail sector now takes place in the digital space.
BI Intelligence, Business Insider's premium research service, forecasts that U.S. consumers will spend $385 billion online in 2016. Moreover, BI Intelligence predicts that number will grow to $632 billion in 2020.
This is hardly surprising considering e-commerce's healthy growth. Though the U.S. retail average growth rate in the first half of 2016 was just 2% for total retail, it was 16% for e-commerce.
The number of online shoppers has grown by nearly 20 million from 2015 to 2016. And these 224 million shoppers are spending more, as the total amount spent online grew from $61 billion in the first quarter of 2015 to $68 billion in Q1 2016. Finally, these customers are transacting more frequently, as the number of online transactions has risen by 115 million from 2015 to 2016.
But all of this shopping online creates its own set of challenges, both for consumers and the companies that are trying to get their products onto shoppers' screens and into their shopping carts. In short, you need a plan.
And to create your ultimate e-commerce battle plan, you need the right intel.
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