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Abu Dhabi, UAEMonday 25 June 2018

Online shopping comes of age in India 

There are still some challenges related to policy of e-commerce space in India 

Walmart is reportedly in talks to buy a controlling stake of more than 40 per cent in India's Flipkart.  EPA
Walmart is reportedly in talks to buy a controlling stake of more than 40 per cent in India's Flipkart. EPA

Ankur Bisen, the senior vice president of retail and consumer products division at consultancy Technopak, talks to The National about India's e-commerce industry.

Amazon has already invested heavily in India. What are your thoughts on Amazon's opportunity in India?

If you look at Amazon's journey from the US, apart from the US and western Europe, it has actually struggled in other markets. In China, it's not there, in Japan it's not a number one player. The same is the case in south east Asia. For Amazon, it clearly knows that India is a big market in terms of size and scale that it has joined.

And for China's Alibaba?

For Alibaba it is the same thing. In the US it struggles against Amazon. It doesn't want to miss India as a market. In the past one-and-a-half year India has become interesting for global e-commerce heavyweights.

What about the fact that Walmart is looking at buying Indian online marketplace Flipkart?

This shows that Walmart is very serious about e-commerce, it is posing a challenge. It's changing its business model to compete with Amazon in the US and in the same way I think that Walmart is looking at India to compete with Amazon, and that's why the interest of Walmart in Flipkart.

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How do you see the Indian e-commerce market evolving?

My thought is that India is an 80-20 market. Eighty per cent of the market eventually will be divided between two major players. The twenty per cent of the market will be for niche players with differentiation. For the categories they operate in, they'll always be there, such as BigBasket in groceries, and Pepperfry which is doing scale business in furniture, and fashion is also looked at differently.

There's a lot of investment that these firms put into winning customers. How are they faring and at what point will they be profitable in India?

On the face of it nobody is making money right now and it defies logic. But I think the optimism of investors in e-commerce is that they want to bet on a business where they'll be the last man standing in that space and that business should be in a position to make money. Take for example, Flipkart. If Walmart ends up buying Flipkart, all the early investors will be very happy with the kind of returns they'll get.

What are the major challenges that e-commerce companies face in India now?

It has come a long way. If I were to answer this question five years ago, I would say there are supply chain challenges, there are payment challenges, there are delivery challenges. All these challenges are still there, but the intensity of these challenges has reduced significantly. The other challenge that is there is around policy. The sector still requires certain regulations, around consumer rights protection, around product quality.