'Flip' the eBay India Kart and 'Snap' every 'Deal' that aids you!!

The last week has been spent by each and everyone in over-analyzing the Flipkart+eBay India merger clubbed with the massive USD1.4bn equity infusion by three large mammoths- eBay US, TenCent and Microsoft and a potential Snapdeal+Flipkart Merger.

So the questions that really needs to be answered here are- Why is all this relevant and Is this the much needed arsenal to take on the heavily funded global majors like Amazon & Alibaba??

In a bid to save you time reading through my post I'll conclude even before I begin my rationalization towards my stand. In my opinion Flipkart has been very smart and has literally struck gold if it can draw the right synergies from this event!!

Over the last few years; we have been part of these aggressive ad campaigns which have essentially been targeted towards getting the 60mn of us e-commerce transacting Indians to come online and buy from either of these large platforms. The fact that eBay India was here for way too long without creating any material impact with regards to the marketplace is well known. This deal gives the struggling platform new wings to play the 'India' e-commerce story.

Lets do a more holistic view of the Flipkart journey(excluding valuations and fund raising rounds)

Let's try and breakdown some of these acquisitions and see the potential that lies within them.

The Myntra+Jabong deal is literally the only way to own a high margin, inventory led business i.e. Fashion!! In my opinion Myntra is miles ahead of Amazon or any other competitors in its space viz. High Fashion. That supported/complimented by Jabong in the mid to low end fashion gives Flipkart a clear edge over most other e-com players in this segment. In house brands like Roadstar, HRX have demonstrated that Indians have broken brand barriers and are ready to experiment with new labels. Yes there are operational challenges and monthly burns in both these entities but some bit of rationalization will definitely evolve here.

PhonePay : FK's answer to PayTm & Amazon Pay

Being and early adopter of this platform I feel that the technology is robust and the end to end integration of one unified wallet across 3 amazing websites makes transacting far easier than most others. Bear in mind the Amazon Pay wallet powered by Qwikcilver is more a gift card mechanism rather than a simple wallet/payment interface. Amazon India has literally had to give out money within the Pay Balance wallets to educate users on just how to use the complicated 'Pay Balance' gift cards. So ease of use definitely falls in FK's court. Can PhonePay be a universally adopted wallet? Maybe not. But in the FK ecosystem it could be very well integrated. Now what does eBay bring to the table here?? Paypal!! Can it be disputed that the worlds foremost secured mobile payment company brings nothing on the table ???

eBay India+ eBay Global+ Flipkart

Now we arrive at the most crucial part of the argument. One global co hives off its local country subsidy onto a local big-boy and then tops it up with an investment round. Yes the world thinks that this is an eye wash deal of sorts. But a deeper in-depth study around the same might yield a slightly larger picture for those short-sighted detesters who don't realize that for a listed entity paying up $500mn isn't play change.

• Did eBay miss out on the India opportunity? Certainly it did!
• Does eBay succeed in the world's largest & fastest market-China? Certainly Not
• Does eBay US grow at the rate it did in its initial years? No!!
• Is India the next best opportunity market? With the demographics and internet penetration its a Certain Yes.

The India opportunity for a player like eBay is way too big to miss in the global fight against Amazon & Walmart. Could eBay India ever be the winner?? Obviously not. Betting on the next best thing after Amazon in India was the only choice left with eBay and they have played their cards right. Post this merger consistently providing FK with capital to grow would be eBay's vision.

The world is a smaller place now

Its a known fact that apart from the addition of new consumers to transact online within India the next big opportunity lies for the Indian merchants to go global. The deal talks about exclusive arrangement in which eBay merchants outside of India can sell to Flipkart shoppers and Flipkart sellers can more easily sell to eBay shoppers outside of India. This really opens up a plethora of opportunities for Indian merchants to play a much larger global audience game. Now comes the amazing caveats to this deal. FK might come to a seller with a package that says

"Hello Dear Seller, Welcome to my ecosystem. If you choose to be exclusively loyal to me then I offer this to you- Listings on Myntra, Jabong, Flipkart, eBay Worldover+TenCent social selling platforms+Ekart logistics + PhonePay+ Paypal efficiently integrated for best payment remittances in the industry.

Now that's a package as a seller I would take over PayTm Mall or anything else. You might argue that Amazon also gives me world exposure. Well you may want to read up a bit on that one; because what Aamzon gives is Prime sales which means you need to ship inventory to their country warehouses from which they would be sold. This process is both time & working capital consuming.

The less spoken/understood about TenCent India Game

Tencent operates WeChat, a “super app” that has over 800 million users, most of them in China. The Shenzen-based firm also has a strong gaming division and a growing online payments business. In India, Tencent has been trying to push WeChat since at least 2013, but hasn’t been able to challenge the dominance of WhatsApp, which was acquired by Facebook in 2014. Tencent’s investment in Flipkart is different, and that’s not just because of its size. The move will pit Tencent against its old rival Alibaba, which has been testing India’s e-commerce waters via Paytm. India, as of now, especially in the consumer internet space, is at a place where the entry is still open and it’s not very expensive. All the global boys Amazon , TenCent & Alibaba are now well positioned to bring into India their learning from across the globe and wage a war for ultimate supremacy in the world's only left large market. In India a fat purse and a strong heart will matter the most. With its bet on Flipkart—just days after picking up a 5% stake in Tesla—Tencent is signalling that it may be up for a fight.

Potentially 'Snap'ping the 'Deal'

SoftBank wants to invest in Flipkart. It wants Flipkart to ‘buy’ Snapdeal so that the former can show something of its doomed investment. While Flipkart does not want Snapdeal, it desperately wants SoftBank, and the many billions of dollars it has. So it has to acquire Snapdeal on paper like it did with eBay India. Investing in Flipkart would mean that SoftBank will finally have a stake in what could become a winning horse. The Amazon question remains, but there is no local player that can compete against Amazon other than Flipkart.

In an ideal world, Flipkart would not want to acquire Snapdeal. After all whats the need to catch a falling knife?? By virtue of being invested in ECom Express(Snapdeals largest logistics partners) I can just add one thing here- Don't underestimate SD's Tier 2,3,4 reach. The 'Unboxed' campaign has had quite a positive brand recall for them. It may not deserve a 900mn valuation but there certainly is a salvage value for this boy.

In my opinion the only good that a platform like Snapdeal has is a certain someone called Kunal Bahl. If there's one person who has the acumen to lead the new consolidated entity it is this one individual.His track record might not be as illustrious to prove that but a few minutes spent with him will make you rethink what I'm implying here.

Concluding Statements

How the overall e-commerce market would take shape in India over the next decade is quite honestly unknown to everyone. It certainly will grow. But will FK continue to be No.1 or is Amazon all set to propel itself ahead. I have my money riding on the new and renewed consolidated Flipkart. While Amazon has been busy selling soaps, grocery and other lower priced items(Shopclues space) the blue eyed poster child of Indian ecommerce Flipkart has done one Juggad after another to stay afloat and pull bunnies out of hats at times when the world has written them off... !!!

I like entrepreneurs who reinvent and 'Juggad It' over corporate czars like Amazon & Alibaba who throw money at a problem just because they have so much of it!!!

Go Flipkart!!!