Jack Welch once said, “If you don’t have a competitive advantage, don’t compete.” Google is doing just that. Having a massive following over the years, Google is ready to enter the e-commerce industry. It seems to be doing a good job grabbing various opportunities in the Indian e-commerce market.
Since China, has not welcomed the American companies warmly: Google had to quit the Chinese market in 2010, and Amazon has under 1% share there. Unfriendly policies and homegrown behemoths have made it very difficult to breach the Beijing market.
As the US market has saturated back home, India seems to be an open invitation. It had over half a billion mobile internet users by June, according to the Internet and Mobile Association of India. More than a billion phones will be sold by 2030, says Nielsen. There’s plenty of space for multiple battlefronts between Amazon, Flipkart and Paytm Mall.
The Flipkart deal.
According to many sources, Google is preparing to enter e-commerce and India could be the first country it targets, which would see a launch coincide with Diwali later this year. Almost two months ago, the rumours were doing the rounds that, the US-based company was planning to invest in Flipkart to foray into the e-commerce business as a stakeholder.
While Google did not officially reply to the report, a spokesperson told the publication that this is all “speculation”. However, sources said that Google has been working on its e-commerce plans since the last one year and has been “rather secretive” about it. The company’s e-commerce venture is said to be led by Caesar Sengupta, Vice President of Product Management at Google, who also leads its Next Billion User initiative.
But currently, Google’s investment in Flipkart seems very uncertain after Walmart decided to 77% of shares in Flipkart. It closed the deal on Flipkart with a whopping $ 16-billion. Google is now looking to go on its own in India.
E-commerce is massive and is only set to grow with the sector estimated to be worth $100 billion by 2020. Taking a leaf out of Amazon’s book, the company would aim to become a significant individual player in the Indian market.
The Google partnership.
Alternatively, it could be that Google planned all along to go it alone with the idea of increased margins and control over its fate within e-commerce. Further evidence that the company is making a major play for the market is search giant’s investment of $550 million in JD.com, a leading Chinese e-commerce company. The two companies said in a statement that it was part of a strategic partnership to develop markets jointly.
Google has also partnered with some 2,000 workshops helping the company to identify sellers on its e-commerce platform which would help accelerate any release plans giving it would have a headstart on the target audience. There have also been changes to the Google Shopping service to expand its offering to attract more physical stores, which ties in closely to the Saathi’ initiative that would see 48,000 saathis across rural India targetted to optimize and accelerate the experience within Google’s ecosystem.
When Google was questioned why it chose now to expand into the market, It was said that Google wanted to understand the India market better. “It believes that it is better to have a budgeted spend than unbudgeted and unlimited discounts that the other cash cow businesses have to fund in perpetuity.”
Google is viewed as a “serious threat”.
It was also told that Flipkart and Amazon now view Google as a “serious threat”, and have cut their ad spending on the search giant by 30%. Both Flipkart and Amazon heavily advertise their products on Google in a bid to remain at the top of search results but are now actively looking at other sources to acquire customers.
Rumours have also been doing the rounds, that Google is not the only one readying to test the e-commerce waters in India. Mukesh Ambani led Reliance Industries and Facebook are also reportedly planning to diversify their offerings in India’s $200 bn worth e-commerce market.
Experts also believe that the growth story of e-commerce in India looks positively green. “With the massive user base, India looms as an attractive market for retailers. It’s currently estimated that 15% (200 million) Indian consumers will be shopping online by end of 2018,” said Adrian Lee, Research Director, Gartner.