Internet Retailing in IndiaCategory Briefing|27 May 2015HEADLINES Internet retailing increases by 85% in current value terms in 2014, to reach INR418.7 billion Mobile internet retailing registers stronger growth than internet retailing Apparel and footwear continues to attract consumers to the channel Flipkart Online Services maintains its lead in internet retailing in value terms in 2014, with a 28% share Internet retailing is expected to increase by a value CAGR of 30% at constant 2014 prices in the forecast periodTRENDS Internet retailing saw the fastest growth in retailing in 2014. Demand was entirely generated by urban consumers, who had access to the internet and computers. As the penetration of computers was still low in India, 2014 witnessed the growth of another channel, namely mobile internet retailing. Volume sales of smartphones registered growth of 69% in volume terms during 2008-2013. This led retailers to invest in their mobile internet retailing platforms, as a large proportion of demand was generated due to mobile browsing of websites. This channel witnessed growth of 151% in 2014 in value terms, which was stronger than the growth of overall internet retailing, at 85% during the year. The growth in 2014 was considerably stronger compared with the current value CAGR registered by internet retailing during the review period 2009-2014, of 49%. The strong growth in 2014 was observed due to the increasing awareness of this channel, and the promotional activities carried out by players. Furthermore, most internet retailers started to focus on second-tier and third-tier cities as well as metropolitan areas, which allowed consumers from these cities to order brands which were not otherwise available; this in turn significantly helped the growth of the channel. 17% of the total Indian population had access to the internet in 2014. The percentage of the population using the internet in India registered a CAGR of 27% over the review period 2009-2014. This was driven mainly by increased awareness of the technology, which was due to the government pushing to increase the internet penetration rate in India. Home improvement and gardening sales through internet retailing registered the strongest growth in 2014. This was because the prices charged by internet retailers of both private label and national brands were considerably lower, which attracted a huge consumer base. Also, the convenience of shopping from home was an added bonus to using this retail channel. Consumer appliances internet retailing saw the slowest growth in 2014. This was observed as the difference in price was not that large, and also, store-based retailers provide exchange offers, whereby consumers can exchange their old appliances for a new one with a minimal down-payment. The latter option is not provided by internet retailers, which led consumers to go to store-based retailers more often. Store-based retailers of apparel and footwear, personal accessories and eyewear and consumer electronics were most impacted by the growth of internet retailing. This was because for all three product categories, internet retailers offered strong discounts throughout the year, which helped to attract a large consumer base during 2014. Due to the increasing popularity of internet retailing in India, store-based retailers started to opt for multi-channel retailing. A large number of store-based retailers, such as Bata India, Aditya Birla Nuvo, Nalli Kuppuswamy Chetty & Sons and Metro Shoes, focused on their internet retailing arms, although their store-based sales continued to be the primary source of revenue generation. The most popular payment method for online transactions continued to be cash on delivery in 2014. This was observed as consumers wanted to make sure that they received the product in the right condition before they paid for their purchase. However, due to the increased use of cards over the last two to three years, a niche percentage of the metropolitan consumer base started to opt for internet banking or debit card transactions.COMPETITIVE LANDSCAPE Flipkart Online Services maintained its lead in internet retailing in 2014 in value terms, with a 28% share. The company enjoyed first-mover advantage, since it was the first to revolutionise the concept of internet retailing since its inception in 2007. Consumers trust the company in terms of quality, and especially delivery, leading to its continued success. Furthermore, the company conducted the first of its kind in India sale called Flipkart Big Billion Day Sale, similar to Black Friday in the US. Although there were complaints regarding the website crashing, and delivery not being on time, the event overall was quite a success, which made Flipkart.com the first choice for internet shoppers in India. Amazon.com registered the strongest growth in value terms in 2014. This was observed as Amazon.com is already a well-established name in internet retailing, due to its success in other countries. Hence, it already had a consumer base ready and waiting to shop. Combined with this, the retailer maintained its reputation as a global player with its fast delivery and very attentive customer care, which helped it to grow during 2014. The concept of multi-channel retailing became popular in 2014; however, most retailers continued to stick to pure channels. The retailers which made the transition to multi-channel retailing were mostly involved in sales of apparel and footwear, which was one of the strongest growing categories in internet retailing in 2014. Flipkart Online Services acquired Myntra.com in May 2014. Both these companies were pioneers in revolutionising internet retailing in India, and the merger was symbiotic. It came at a point when international players, namely, Amazon.com and eBay.in, started to become popular in India. Although both these companies continue to work independently, the combined entity continued to have smooth operations after the acquisition. Store-based retailing in India registered current value growth of 12% in 2014, and internet retailing saw growth of 85%. Store-based retailing is well-established in the country, and is the primary channel for retailing, especially for groceries. However, in case of non-grocery retailing, internet retailing registered extremely strong growth, primarily due to apparel, footwear, beauty and personal care, personal accessories and eyewear. E-marketplaces and C2C transactions in India are being pushed with the help of companies such as OLX.com and Quikr.com. These websites are promoted heavily via electronic media, especially television commercials and print media. However, these do not have a direct impact on B2C players.PROSPECTS Internet retailing is poised to register the strongest growth in retailing in the forecast period. This will be driven by both the urban and semi-urban consumer base. The urban consumer base has already switched to shopping for non-grocery products online to a large extent; a switch from store-based retailing of groceries to internet retailing of groceries is also expected amongst the urban consumer base. For the semi-urban consumer base, growth will be driven by the availability of brands from internet retailers which are otherwise not available via store-based retailers in such parts of the country. Internet retailing is expected to increase by a value CAGR of 30% at constant 2014 prices in the forecast period. This is slightly lower than the 36% value CAGR at constant 2014 prices experienced by the channel during the review period 2009-2014. This slowdown is expected due to the growing maturity of the channel; however, it will continue to increase strongly. Mobile internet retailing is expected to generate 18% of overall sales in internet retailing in 2019. This will be driven by the strong penetration of smartphones in India. The volume growth of computers and peripherals in India during the period 2013-2018 is expected to be 13%, whereas that of smartphones is expected to be 35% in the same period. Retailers started to realise the potential of growth of mobile internet retailing, and during the review period launched their mobile applications for shopping, which were very well-received by consumers. Apparel and footwear through internet retailing is expected to see the strongest CAGR in the forecast period to 2019 in value terms at constant 2014 prices. This is expected due to the rising number of brands which will be available via internet retailing, the increased penetration of delivery systems by retailers, even in the remotest of areas, and continued discounts offered by retailers. The leader in internet retailing in 2014, Flipkart Online Services, is expected to continue to do well in the forecast period. As the company did not reach break-even point until 2014, it is expected to do so in the next one or two years. The growth potential of the channel is very high, and Flipkart is a trusted name in internet retailing in India, which will benefit the growth of the retailer. Any retailers which do not develop mobile internet retailing apps are expected to witness a slowdown in growth. Consumers started to switch to mobile platforms for their shopping in 2014, which is expected to continue in the forecast period.CHANNEL DATATable 1 Internet Retailing by Category: Value 2009-2014INR bn, retail value rsp excl sales tax200920102011201220132014

Apparel and Footwear7.18.912.425.951.4103.9

Beauty and Personal Care-0.31.02.33.85.1

Consumer Appliances2.22.83.34.04.85.4

Consumer Electronics18.621.930.136.444.852.5

Consumer Healthcare0.40.40.50.60.80.9

Food and Drink------

Home Care----0.00.2

Home Improvement and Gardening------

Housewares and Home Furnishings-----2.3

Media Products4.77.19.912.816.420.6

Personal Accessories and Eyewear4.88.212.818.123.435.7

Pet Care0.00.00.00.00.00.1

Traditional Toys and Games0.10.10.10.10.20.2

Video Games Hardware0.00.00.00.00.00.1

Other Internet Retailing18.832.440.655.481.2191.7

Internet Retailing56.682.1110.9155.8226.9418.7

Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sourcesTable 2 Internet Retailing by Category: % Value Growth 2009-2014% current value growth, retail value rsp excl sales tax2013/142009-14 CAGR2009/14 Total

Apparel and Footwear102.270.81,354.0

Beauty and Personal Care35.4--

Consumer Appliances11.919.7145.3

Consumer Electronics17.223.1182.6

Consumer Healthcare21.520.0149.0

Food and Drink---

Home Care2,599.3--

Home Improvement and Gardening---

Housewares and Home Furnishings---

Media Products25.434.6341.9

Personal Accessories and Eyewear52.649.4643.6

Pet Care32.250.0658.6

Traditional Toys and Games32.924.1194.5

Video Games Hardware20.729.4262.4

Other Internet Retailing136.059.2922.3

Internet Retailing84.549.2639.4

Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sourcesTable 3 Internet Retailing Company Shares: % Value 2010-2014% retail value rsp excl sales tax20102011201220132014

Flipkart Online Services Pvt Ltd0.00.511.526.027.5

Amazon.com Inc1.01.01.11.213.5

Jasper Infotech Pvt Ltd0.10.10.31.112.3

Myntra.com2.52.85.87.97.9

Dell India Pvt Ltd26.823.716.912.97.7

Jabong.com--1.63.53.1

eBay India Pvt Ltd0.91.01.00.90.6

TV18 Home Shopping Network Ltd0.70.80.80.70.5

Apple Inc0.10.10.30.50.4

Times Internet Ltd1.61.20.90.60.3

Rediff.com India Ltd1.00.70.40.30.2

Indiaplaza India Pvt Ltd0.70.50.40.30.1

Actoserba Active Wholesale Pte Ltd-0.20.20.20.1

Future Value Retail Ltd0.50.20.10.00.0

Sify Ltd0.70.70.50.4-

Digitail Management Services Pvt Ltd0.20.9---

Trinethra Super Retail Pvt Ltd-----

Others63.265.758.143.525.7

Total100.0100.0100.0100.0100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sourcesTable 4 Internet Retailing Brand Shares: % Value 2011-2014% retail value rsp excl sales taxCompany2011201220132014

FlipkartFlipkart Online Services Pvt Ltd0.511.526.027.5

Amazon.comAmazon.com Inc1.01.11.113.4

Snapdeal.comJasper Infotech Pvt Ltd0.10.31.112.3

MyntraMyntra.com2.85.87.97.9

DellDell India Pvt Ltd23.716.912.97.7

Jabong.comJabong.com-1.63.53.1

ebay.ineBay India Pvt Ltd1.01.00.90.6

HomeShop18TV18 Home Shopping Network Ltd0.80.80.70.5

App StoreApple Inc0.10.30.50.4

Indiatimes ShoppingTimes Internet Ltd1.20.90.60.3

India OnlineRediff.com India Ltd0.70.40.30.2

IndiaplazaIndiaplaza India Pvt Ltd0.50.40.30.1

ZivameActoserba Active Wholesale Pte Ltd0.20.20.20.1

Junglee.comAmazon.com Inc-0.10.10.1

FuturebazaarFuture Value Retail Ltd0.20.10.00.0

SifySify Ltd0.70.50.4-

Letsbuy.comDigitail Management Services Pvt Ltd0.9---

Fab MallTrinethra Super Retail Pvt Ltd----

OthersOthers65.758.143.525.7

TotalTotal100.0100.0100.0100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sourcesTable 5 Internet Retailing Forecasts by Category: Value 2014-2019INR bn, retail value rsp excl sales tax201420152016201720182019

Apparel and Footwear103.9183.3276.3343.1431.3536.2

Beauty and Personal Care5.15.67.68.38.99.6

Consumer Appliances5.45.76.16.56.97.4

Consumer Electronics52.552.655.256.658.360.0

Consumer Healthcare0.91.01.21.31.41.6

Food and Drink------

Home Care0.20.30.40.40.50.6

Home Improvement and Gardening--0.00.00.00.0

Housewares and Home Furnishings2.315.225.734.338.746.4

Media Products20.623.827.230.734.137.3

Personal Accessories and Eyewear35.744.253.458.864.173.0

Pet Care0.10.10.10.10.20.2

Traditional Toys and Games0.20.30.30.40.40.5

Video Games Hardware0.10.10.10.10.10.1

Other Internet Retailing191.7239.0300.3441.1607.4787.6

Internet Retailing418.7571.0753.9981.71,252.31,560.4

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sourcesNote: Forecast value data in constant terms.Table 6 Internet Retailing Forecasts by Category: % Value Growth 2014-2019% constant value growth, retail value rsp excl sales tax2014/20152014-19 CAGR2014/19 TOTAL

Apparel and Footwear24.338.8416.0

Beauty and Personal Care7.413.286.1

Consumer Appliances6.76.335.9

Consumer Electronics3.02.714.2

Consumer Healthcare9.210.564.9

Food and Drink---

Home Care22.028.8254.8

Home Improvement and Gardening---

Housewares and Home Furnishings19.882.71,935.1

Media Products9.312.681.3

Personal Accessories and Eyewear13.815.4104.3

Pet Care18.924.8202.3

Traditional Toys and Games19.319.9147.9

Video Games Hardware18.516.6115.5

Other Internet Retailing29.732.7310.8

Internet Retailing24.630.1272.6

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sourcesNote: Forecast value data in constant terms.Flipkart vs Snapdeal vs Amazon: The battle of the big boys: Flipkart has a 44 per cent share of the $6.3 billion Indian e-commerce market. Snapdeal is No.2 with 32 per cent share while Amazon has 15 per cent.Das, Goutam.Business Today(May 24, 2015).Turn on hit highlighting for speaking browsers by selecting the Enter buttonHide highlightingAbstract (summary)TranslateAbstractThe conversation with Amazon India's country manager Amit Agarwal begins with him dismissing his rivals.Flipkart, India's largest e-commerce company, does everything Amazon does, and vice versa, I point out. There is little product differentiation. Agarwal snaps back. "They are a very low benchmark."Colleagues call Agarwal a "Type A" - a personality type that psychologists say are excessively competitive, aggressive, work-obsessed, success-oriented, proactive, and mostly workaholic. Not just Agarwal. Almost all leaders we come across in India's nascent but fast growing e-commerce industry fit that description. It is becoming a slugfest.According to a 2014 report by Morgan Stanley, three players have pulled ahead in the horizontal marketplace race.Flipkartleads with a 44 per cent share of the $6.3 billion Indian e-commerce market, by Gross Merchandise Value (GMV). Snapdeal is No.2 with 32 per cent share, while Amazon, a late starter in India - it launched in June 2013 - has 15 per cent. Amazon touched $1 billion in sales in 2014. For the company, India is the fastest-growing international market to reach that mark, in just one-and-a-half years. Amazon does not agree with the Morgan Stanley report on the difference in GMV share.And Snapdeal CEO Kunal Bahl insists the race betweenFlipkartand his company is much closer. The Morgan Stanley report was published in February, before Snapdeal bought FreeCharge, a mobile transactions company. "Today, if you add FreeCharge, which is a few hundred million dollars annually, it is really neck and neck," Bahl says. "Flipkartand Myntra had a five-year, $500-million, and 10,000-person head start on us. Today, it does not seem someone had a head start on us," he adds. Snapdeal started in 2010. By the time Amazon launched in mid-2013,Flipkartwas already nearing an annual GMV of a billion dollars.Flipkart, meanwhile, thinks its first-mover advantage will hold good. "Flipkartas a brand has very high consumer interest. It is the most trusted online retail brand in the country," says Mukesh Bansal, the company's head of e-commerce. "We have deeper understanding of consumers. BetweenFlipkartand Myntra, it would be more than 50 per cent market share of all consumer transactions in India," he adds. Founders Sachin and Binny Bansal did not speak to BT for this article, but four company executives spoke onFlipkart's behalf.Meanwhile, revenue figures from Registrar of Companies (RoC) do showFlipkartremains in lead.Flipkartdidn't have much competition in 2007 when it started. Its founders initially thought of a price comparison website - an aggregator of e-commerce sites. But they soon realised there were hardly any e-commerce sites in India. So they foundedFlipkartand it quickly pulled away from older e-tailers such as Indiaplaza by innovating and offering many firsts - 24/7 customer support, cash on delivery, as well as a return policy.But those innovations are now commoditised. Every big player offers the same. All three also advertise aggressively on television and print to build their brand recall; they are battling to be the first to announce category launches, new services, and funding; competing for global talent while taking potshots at each other on social media.On February 20, a picture of aFlipkartoffice with two receptionists and an Amazon-branded package lying in one corner went viral on Twitter. "Even @FlipkartOrders from @Amazon!" the tweet read.Flipkartresponded: "We recycled said packaging as our reception's dustbin." Twitteratis screamed for more blood. "Flipkartand Amazon, go get a knife you both, let's see who wins," a post said. Amazon India tweeted: "There is a bit of Amazon in every e-commerce company."The real knives in this battle are more dangerous than tweets. According to industry sources, Amazon India has data scientists whose job is to only execute strategic pricing that makesFlipkartbleed. Sellers on Amazon may have 2,000 refrigerators, for instance. It may offer deep discount on 300 of them. That will provokeFlipkartto discount further - and hence add up to its losses. "Amazon is using it out of design to maximise the bleeding atFlipkart. Today the game is about who has the stamina to last longer," says an industry veteran who does not want to be identified.All three are marketplaces and sellers on their platforms don't necessarily agree to price cuts the companies want; the trio indulge in 'gap funding'. They make up the difference by paying sellers and charging the cost to promotional expenses.Full Text TranslateFull text Turn on search term navigationThe conversation with Amazon India's country manager Amit Agarwal begins with him dismissing his rivals.Flipkart, India's largest e-commerce company, does everything Amazon does, and vice versa, I point out. There is little product differentiation. Agarwal snaps back. "They are a very low benchmark."Colleagues call Agarwal a "Type A" - a personality type that psychologists say are excessively competitive, aggressive, work-obsessed, success-oriented, proactive, and mostly workaholic. Not just Agarwal. Almost all leaders we come across in India's nascent but fast growing e-commerce industry fit that description. It is becoming a slugfest.According to a 2014 report by Morgan Stanley, three players have pulled ahead in the horizontal marketplace race.Flipkartleads with a 44 per cent share of the $6.3 billion Indian e-commerce market, by Gross Merchandise Value (GMV). Snapdeal is No.2 with 32 per cent share, while Amazon, a late starter in India - it launched in June 2013 - has 15 per cent. Amazon touched $1 billion in sales in 2014. For the company, India is the fastest-growing international market to reach that mark, in just one-and-a-half years. Amazon does not agree with the Morgan Stanley report on the difference in GMV share.And Snapdeal CEO Kunal Bahl insists the race betweenFlipkartand his company is much closer. The Morgan Stanley report was published in February, before Snapdeal bought FreeCharge, a mobile transactions company. "Today, if you add FreeCharge, which is a few hundred million dollars annually, it is really neck and neck," Bahl says. "Flipkartand Myntra had a five-year, $500-million, and 10,000-person head start on us. Today, it does not seem someone had a head start on us," he adds. Snapdeal started in 2010. By the time Amazon launched in mid-2013,Flipkartwas already nearing an annual GMV of a billion dollars.Flipkart, meanwhile, thinks its first-mover advantage will hold good. "Flipkartas a brand has very high consumer interest. It is the most trusted online retail brand in the country," says Mukesh Bansal, the company's head of e-commerce. "We have deeper understanding of consumers. BetweenFlipkartand Myntra, it would be more than 50 per cent market share of all consumer transactions in India," he adds. Founders Sachin and Binny Bansal did not speak to BT for this article, but four company executives spoke onFlipkart's behalf.Meanwhile, revenue figures from Registrar of Companies (RoC) do showFlipkartremains in lead.Flipkartdidn't have much competition in 2007 when it started. Its founders initially thought of a price comparison website - an aggregator of e-commerce sites. But they soon realised there were hardly any e-commerce sites in India. So they foundedFlipkartand it quickly pulled away from older e-tailers such as Indiaplaza by innovating and offering many firsts - 24/7 customer support, cash on delivery, as well as a return policy.But those innovations are now commoditised. Every big player offers the same. All three also advertise aggressively on television and print to build their brand recall; they are battling to be the first to announce category launches, new services, and funding; competing for global talent while taking potshots at each other on social media.On February 20, a picture of aFlipkartoffice with two receptionists and an Amazon-branded package lying in one corner went viral on Twitter. "Even @FlipkartOrders from @Amazon!" the tweet read.Flipkartresponded: "We recycled said packaging as our reception's dustbin." Twitteratis screamed for more blood. "Flipkartand Amazon, go get a knife you both, let's see who wins," a post said. Amazon India tweeted: "There is a bit of Amazon in every e-commerce company."The real knives in this battle are more dangerous than tweets. According to industry sources, Amazon India has data scientists whose job is to only execute strategic pricing that makesFlipkartbleed. Sellers on Amazon may have 2,000 refrigerators, for instance. It may offer deep discount on 300 of them. That will provokeFlipkartto discount further - and hence add up to its losses. "Amazon is using it out of design to maximise the bleeding atFlipkart. Today the game is about who has the stamina to last longer," says an industry veteran who does not want to be identified.All three are marketplaces and sellers on their platforms don't necessarily agree to price cuts the companies want; the trio indulge in 'gap funding'. They make up the difference by paying sellers and charging the cost to promotional expenses. While companies remain tightlipped, it is widely believed thatFlipkart, Snapdeal and Amazon burn more than $100 million of cash every month.Flipkarthas the highest cash burn rate but then it also raised the largest amount - some $2.3 billion so far. Snapdeal has raised close to $1 billion in 2014, while Amazon India is backed by a parent which has pledged $2 billion investment in the Indian marketplace. All will probably need even more money. To win market share, all three discount constantly and add to their already humungous losses.Flipkart, in 2013/14, ran losses of Rs 400 crore whereas Snapdeal lost Rs 265 crore, and Amazon Rs 321 crore. Some estimates sayFlipkartand Snapdeal have roughly enough cash to last out a year and a half at current burn rates. And this war is unlikely to be settled within that time period.While all three appear largely similar to the average customers, there are subtle differences in offerings and business philosophies. "People don't go to Amazon for a crazy sale. But they do toFlipkartand Snapdeal. Amazon's philosophy is to offer a better product at everyday low price. ButFlipkartand Snapdeal are seen as deep discounting sites," says Mahesh Murthy, Managing Partner at Seedfund, an early-stage venture capital company.Q&A: We'll get 100,000 sellers by December 2015:Flipkart's Ankit NagoriSnapdeal insists it is wrong to see it as a vanilla e-tailer. It says it targets the entire consumption ecosystem. "Retail in India is a $500 billion market, consumption is $1.4 trillion, and retail is a subset of consumption," says Bahl. "What comes between retail and consumption are travel, utility payments, education, financial services, etc. There is no reason a digital ecosystem should not make those more efficient," he adds. Snapdeal's acquisition of mobile transaction company FreeCharge and RupeePower, a marketplace for loans, credit cards, and financial services, is part of that overall strategy to be the big player in the consumption space, he says.The battle of tomorrow, it emerges, will be fought on two other parameters. The rivalry will be about offering new and more selection of product and services, and faster delivery. Low prices, of course, will continue to be a primary driver but all the three e-tailers are innovating to reduce the seller's expenses. The big hope: it would induce him to sell cheaper all by himself; gap funding and, thereby, cash burn, would slow.Amazon has played the e-commerce game for many more years than bothFlipkartand Snapdeal combined - the company was founded in 1994 in Seattle. Its India team says it has in place the most comprehensive plan to reduce cash burn. Amazon has brought in a range of seller services that have been tested in markets globally. Services such as 'Pay with Amazon' addresses payment costs. It allows sellers to use Amazon's payment infrastructure, its customer base, and the delivery addresses on their website. Traffic costs, similarly, are addressed through some ad products while 'Fulfilled by Amazon' gives sellers access to warehouse space, picking, packing, delivery, and return services. "There is a per-unit rate. All capital costs that lock up working capital have become variable costs," Agarwal says. If the seller already has a warehouse, he can just use the company's delivery logistics through a product called 'Easy Ship'. The company recently launched Amazonbusiness.in, a separate website for small and medium businesses to buy bulk quantities at wholesale prices. This is a business-to-business (B2B) marketplace, similar to Amazonsupply, the retailer's industrial buying venture in the United States."We are taking every single cost element out of the equation. That is a big driver of low prices - the only sustainable way to drive low prices," says Agarwal. "You can lower the price yourself through discounting. But you cannot afford to do it for a very long time." Q&A: We'll never compete with our sellers: Snapdeal's Kunal BahlWhileFlipkartand Snapdeal offer fulfilment services and other products to ease seller costs, neither of them has quite the bouquet Amazon does. However, both are working to offer their sellers cheaper capital."We are partnering non-banking finance companies (NBFCs) where sellers can source capital. We have already provided capital to more than 50 sellers as part of the lending pilot. We provide data and risk profiling to NBFCs," says Ankit Nagori, Senior Vice President atFlipkart. Snapdeal has a 'Capital Assist' Programme for seller financing. Sellers get funded through a marketplace created for them where lenders partner. CEO Kunal Bahl says the company would have assisted loans worth Rs 100 crore to small businesses on its platform, and thus far, there is no non-performing asset. "The businesses borrowing are paying 100 to 150 basis points less than what they would have otherwise in the offline market. That they pass on to consumers as price benefit," he explains.All e-tailers are aggressively stocking up on sellers and products. Snapdeal is adding one product to its selection every 10 seconds. Amazon has about 700,000 items in stock today that can be delivered the next day; about 22 million products in its catalogue overall. Both these companies have 100,000 sellers (Amazon number includes sellers on Junglee, a comparison site owned by the company's US parent).Flipkarthas 30,000 sellers and plans to get to 100,000 by 2015-end. WS Retail, set up by Sachin and Binny Bansal in 2010, held most of its inventory and is the company's largest seller - it had sales of Rs 3,135 crore in 2013/14. The founders have now divested their stake. AndFlipkartflipped from being an inventory-led model to being a marketplace in 2013. "Flipkartis now a 100 per cent marketplace. The largest seller in different categories is not the same guy," says Nagori.People don't go to Amazon for a crazy sale. But they do toFlipkartand Snapdeal.Mahesh Murthy Managing Partner, SeedfundFlipkart has its eyes on the next big vertical after electronics and fashion to grow its selection. These are India's largest e-commerce categories, accounting for about 82 per cent of GMV. According to Morgan Stanley, 34 per cent ofFlipkart's GMV as of 2014 is electronics, followed by 30 per cent from apparel. Now, it wants to test the market for home and furniture, says Mukesh Bansal. "There are a lot of activities planned," he says. He estimates this slice of the market at $20 billion. "Today, our furniture delivery is very difficult. The experience is not smooth. So we are looking to innovate and substantially improve the supply chain," he says. Of course, that would bringFlipkartinto competition with Pepperfry and Urban Ladder, no mean warriors themselves. But that is another story.Snapdeal is oiling the third leg of the e-commerce machine - faster delivery. Half of its orders are shipped through its fulfilment centres. That reduces time to delivery, while improving homogeneity of packaging. The company has picked up an undisclosed stake in supply-chain company GoJavas that is present in more than 100 Indian cities. "Our sales were growing faster than the capacity of third-party logistics companies," Bahl says. The stake will help GoJavas scale up while providing Snapdeal with visibility in underserved routes and capacity.Flipkartis banking on technology and automation to do same-day deliveries, within a few hours of the order being placed, in a few categories. There is talk that the company is working with kirana stores, much like Amazon, but no details are known yet. "That's how FMCG will be sold in India where small and medium enterprises fulfil orders," is all thatFlipkart's Nagori is willing to say.And what of Amazon? The company recently launched a service titled 'Kirana Now' with a focus on everyday essentials delivered in two to four hours. The logic is simple: for products to reach fast, it needs to be closer to the customer. It can't get closer than the kirana store. "We are currently doing a pilot for 24 hours. The kirana store that can serve one km can now serve five km using our tools. They have software available to them that connects to the Amazon platform and we manage the logistics and after logistics," says Agarwal. This is a service that will take time to perfect and scale but Amazon, meanwhile, is tapping the kirana stores for a different reason as well. Kiranas that have excess space can now register with Amazon and function as delivery centres and pick up points for orders.Both Amazon and Snapdeal want to unseatFlipkartas market leader.Flipkartknows that well and is trying to come up with fresh ideas to maintain its lead. The e-commerce space is unforgiving and typically only one player survives. Even funding dries up as market shares slip.Amazon will be happy to play the waiting game, say strategists. It will wait for its rivals to burn out. This is what the company did in the US. In a recent talk, Scott Galloway, the founder of L2, a think tank for digital innovation, and Clinical Professor of Marketing at the NYU Stern School of Business, said that no company in the world has ever had access to cheap capital in a way Amazon did and now they are taking advantage of it.Word count:2261