On Amazon, Flipkart, Snapdeal, Softbank and what might lie ahead.

I was recently asked about my thoughts on what seems to be currently happening on the large e-commerce player front. Some of it was used in this piece on BloombergQuint.

Here's the set of original questions and answers in full:

Q:  Can the combined might of Flipkart and Snapdeal can take on Amazon. Clearly the backdrop of the Flipkart - Snapdeal deal is to get Softbank on board and to create a war chest of capital. Also, Do you see any value in this deal ? 

My answer: I doubt that adding Snapdeal will significantly improve Flipkart's chances. You can see this a couple of ways.

If you were to count, for instance, Flipkart's web and mobile traffic and compare that with Amazon's, you'll see the latter is almost twice the former. (198 million visits last month for Amazon.in versus 107 million for Flipkart, according to Similarweb ) While Snapdeal had about 28 million visits. 

If you were to charitably assume that half of Snapdeal visits were not regulars at Flipkart and now will go to the joint entity while the other half already go there, that number - 14 million - will add 13% of visitors to Flipkart. But it will still leave a huge gap with the leader here, Amazon.

To me, clearly, Flipkart's aim here is to get in Softbank, who is the global player that is funding the local #2 businesses around the planet. Softbank backs number 2s Ola and Didi against the number 1 Uber, it backs number 2 inMobi against the number 1 Google, it back number 2 Hike against the number 1 Whatsapp and will back Flipkart against the number 1 Amazon. While this strategy of focusing on the number 2's across countries is a little hard to understand, it seems to be a consistent one for Softbank and hence it was important for Flipkart to keep Softbank happy and bring it into the fold.

By being nice to Softbank and taking their earlier soured investment off their hands, I sense Flipkart hopes that Softbank will keep funding the joint entity into the future against Amazon.

Q: Also what would it take to take on a giant like Amazon? 

My answer: What it will take is actually a differentiated product, not marketing spends in the billions of dollars.

With a $400 billion market cap, Amazon has no shortage of money and can match discount for discount from any rival into the future for as long as it takes, like it's doing with the iPhone7 wars in India.

But the truth is that battles online are not won on discounts and on marketing spends. But on clearly differentiated offerings that consumers evangelise by word of mouth.

I believe Amazon's new weapon in India is Amazon Prime Video. Now if they bid for and then win, let's say IPL or other cricket rights - and offer it to their Amazon Prime members, it could be a strong reason to build loyalty and usage of the Amazon platform over time.

This is lateral and innovative thinking in the e-com wars. We're yet to see anything like this from the other players.

Q: Can you also specify the strengths and weaknesses of Flipkart - Snapdeal over Amazon and vice versa?

My answer: Actually, all the mergers and monies that it raises simply postpones the inevitable for Flipkart. I believe this is a war Amazon will win, sooner or later.

A billion here or a billion there spent on discounts by one firm or the other will make the Indian consumer temporarily happier. In the long run, consumers will always choose the more satisfying offering.

But this game is perhaps over.

Mahesh Murthy is a marketer and investor. He tweets at @maheshmurthy