WHAT IS E-COMMERCE?
Electronic commerce (e-commerce) is a business strategy that allows consumers and businesses to buy and sell goods and services over the Internet. Ecommerce can be carried out on computers, tablets, smartphones, and other smart devices, which are very readily available in every household nowadays. Ecommerce transactions can be used to buy almost any commodity or service imaginable.
In India’s fiercely competitive and fast expanding e-commerce industry, a new conflict is brewing. After years of fighting Amazon, Walmart-owned Flipkart is now up against a newer competitor: SoftBank-backed Meesho.
THE TALES OF EMERGENCE:
Flipkart is an Indian e-commerce company based in Bangalore, Karnataka, India. It is registered as a private limited company in Singapore. Before expanding into other product categories such as consumer electronics, fashion, home goods, groceries, and lifestyle products, the company initially focused on online book sales.
The rising star Meesho is social e-commerce, which also has its headquarters in Bangalore, India. Small businesses and individuals can use social media platforms like WhatsApp, Facebook, and Instagram to launch online stores. In 2016, Meesho was one of three Indian startups accepted into Y Combinator. Meesho has also been reported to be the most downloaded app on the PlayStore in July 2021.
THE COMPETITION:
Flipkart is seen as facing a new threat in the e-commerce market with the advent of Meesho. In the recent past, there have been quite a handful of competitors that have tried competing against the mighty Flipkart namely, Snapdeal, Shopclues but these turned out to be feeble competitors in the long run as Flipkart and Amazon continued ruling the e-commerce in India.
Due to the Indian e-commerce market being an oligopoly, new competitors usually face tremendous and cut-throat competition as bigger names such as Flipkart and Amazon have always dominated the industry and serve challenges to the growth of new competitors. But, Meesho has turned the tables and changed the antecedent trend of the market with its appearance. Its arrival is gradually bringing a reset in the e-commerce market.
As a coping strategy, Flipkart requested third-party logistics companies such as Delhivery, Ecom Express, Shadowfax, and XpressBees to reduce their commitments to Meesho.
This action belonging to Flipkart, largely interpreted as an attempt to stretch its muscles in the face of increasing competition, is unlikely to be welcomed. Because, while Flipkart has its delivery service and warehouses (Ekart Logistics), Meesho is fully reliant on third-party logistics suppliers and now accounts for 40-50 per cent of the company’s total shipments. Flipkart, on the other hand, predominantly employs Ekart and relies on third-party vendors for about a fifth of its deliveries.
MEESHO’S GROWTH:
While Meesho began with a focus on social commerce, its direct sales share has been increasing, pitting it against competitors like Flipkart and Amazon. It now gets 75% of its revenue directly from clients who use its platform, with the remaining 25% coming from resellers. Flipkart also established Shopsy, a social commerce platform, a few months ago to bring together sellers, resellers, and consumers on its platform.
FLIPKART’S ADVANTAGES:
While Meesho is catching up to Flipkart and Amazon in terms of daily order quantities, its average order value is far lower than Flipkart’s average selling price. This is also due to the company’s business mix: while Flipkart’s business is dominated by smartphones and gadgets, Meesho’s is dominated by apparel and home care.
RIVALRY OR THE BEGINNING OF AN ALLIANCE?
Meesho is here to stay for the long run as it is continually making millions and growing furthermore. Flipkart will have to buck up its expertise in the area to tackle Meesho’s fast and rapid growth. Both of these companies could also think along the lines of an alliance if they necessitate growth and development in the future.
Also Read: Rise in India’s Exports: will it Last?
