//

Flipkart needs to find a forte; it has kind of lost the positioning to Amazon, being distracted a little by launching groceries and stuff, according to the author

The author Vijay Anand is the Founder and CEO of The Startup Centre, a startup accelerator based in Chennai. This post first appeared in Quora.

Context is everything. So before I answer this question, I’d like to set the context carefully.

Flipkart is perhaps the spearhead of the new wave of startups that are coming out of India. Until then, did we have startups? Absolutely. But did we have any company that as valued (pre-IPO) as much as companies across the world? Nope. Flipkart is that spear tip.

So, quite literally, the company is in a virgin territory. There is no precedence, and for a company that is relatively young, they have so far managed really well. This is a company that was built from scratch, went national, took on global players, and has founders who have matured to become rather impressive CXOs. That’s all firsts.

Flipkart is interesting, because they are one of the few companies that actually have consumer segmentation data. Sure, they are doing transactions, but they also have the records of almost a 100 million users in India (the top10 per cent). For a country that has an estimated 240 million users on the Internet, that’s almost 50 per cent market share. I’d say that is pretty impressive.

They have enough data that they can today launch almost any product, aimed at these 100 million users — except that this is not aimed at poverty alleviation or strengthening farming etc.

The Aadhaar connection

The only other serious competition for Flipkart’s database is the Aadhaar initiative. And while the Aadhaar will have first level info — name, phone number, address etc — it wouldn’t have any of the demographic info, without it getting attached to some of the other government paper work (we are a few years away from all those systems being integrated).

So, you can understand why Flipkart is valuable. For a country where everyone is trying to reach out to the middle class, Flipkart can be — and is — a gateway. They haven’t leveraged it, though they are carefully experimenting (trying to sell apartments etc), but really, that is the goldmine of data that they are really sitting on.

How much is that worth? That is the question. And followed by, how soon will they — if at all — do anything with that data?

As is the nature of spear tips, they are the first company that is taking the brunt, because there is a potential slowdown in the US that is lurking and there are unicorns being written off all over the world. But valuations are based on future projections, and the Indian market is far far away from slowing down. In fact, things are just starting to get warmed up in here.

So what’s going against Flipkart? There is competition. There is a conflict among the loyalists on whether to go with Flipkart or with Amazon or with Snapdeal — personally, I choose Flipkart for general stuff (books and sometimes even appliances), Amazon for niche products (they have better selection if you want a nice looking wine rack), and I go for Snapdeal for deals.

Snapdeal is like the street shops that you go to, where you’ll find what you want, but you buy it at your own risk.

Snapdeal has AliExpress’s backing, which means they will grow that inventory supply from China rather fast. And the niche high-end positioning that Amazon has taken (and a brand to boot, and rather impressive delivery network), meaning they will segment this user base further into three parts. Flipkart will lie in the middle — and that’s where it’s an issue. They need to find a forte. They’ve kinda lost the positioning to Amazon, being distracted a little by launching groceries and stuff.

Now, none of this would matter if the market was consistently growing; if that is the case, then 90 per cent of the market is still wide open for everyone to grab. The reason why there is some pessimism is because the Internet growth hasn’t happened like any of us predicted — it’s actually much much slower. And there is very few transactions happening on mobile.

So, we have a device and access problem. There are lots of mobile phones — and people are using them, but they are not transacting. And on the other hand, there aren’t many PCs/tablets that are selling — estimates are at roughly 6-10 million a year.

This also explains why Flipkart got on the Free Basics bandwagon early on, but had to drop off. In some ways, it would have solved the access problem.

So that’s where the issue is. Now certain states are rolling out free Internet — For example, Tamil Nadu (South India) is rolling out the government-run Internet service, and the Delhi government has for a while been talking about a free-to-access WiFi service. Some of those will solve the access problem. If that is the case, then it’s a matter of fixing behaviour to get people to not just browse, but also add to cart, and make payment using mobile.

App is just a shrunk version of the web

In my opinion, the only thing that is standing in the way is really really bad UI. The mobile app for any of these guys — be it Flipkart or Amazon — is essentially a shrunk version of the web. Whoever rethinks it, will have this market. Add regional language to it, and that’s your ticket to unlocking the other 90 per cent. If they do, they are going to be back on top of this tide.

Amazon is not India-based — all said and done their turn-around times will be longer. So it’s going to be up to Snapdeal or Flipkart as to how they play this out. And Snapdeal is way ahead in experimenting with regional languages.

It is strictly my opinion that Flipkart is undervalued. Their target is to get to US$8 billion in sales this year. US$15 billion as valuation is little less than twice that. Maybe, one way for Flipkart to expand is to get into other territories like Sri Lanka/Malaysia and /or acquire RedMart in Singapore.

The views expressed here are of the author’s, and e27 may not necessarily subscribe to them.e27invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, please send us an email at sainul[at]e27[dot]co.

The post How bad are things for Flipkart today? appeared first on e27.

from e27 http://ift.tt/1TXhxoS