Rakuten, Japan’s biggest e-commerce firm is all set to enter Indian e-commerce space according to a report in ET. Rakuten commonly referred to as Japan’s Alibaba has been aiming to go global for some time and now it is likely to follow Amazon’s footsteps and enter India’s blooming e-commerce space.
It started in 2014 when Rakuten opened a development center in Bangalore which now has turned into a business office and has already started poaching mid-level managers from Flipkart and Amazon which hints that they are now gearing up to set an online retail platform in India. Apart from Rakuten, Alibaba too is planning to enter Indian e-commerce space directly sometime this year itself. It has already started investing in a wide range of e-commerce companies in India.
A Rakuten spokesperson told ET, “India is a vibrant growth market and a great source of talent and ideas for us at Rakuten. We are always interested in new global opportunities for growth but we don’t have any comments on development in India at this time.” The spokesperson was declining to comment but Rakuten’s moves are making their target pretty clear.
A quarter of Japan’s e-commerce business is already accounted for by Rakuten. It has already expressed its goal on global expansion. It acquired Buy.com in the US in a $250 million deal then in 2014 it acquired San Francisco based online cash-back company Ebates Inc. for $1 billion. It also acquired Viber for a striking $900 millions.
Alibaba, China’s e-commerce leader has been active when it comes to investing in Indian start-ups. It already is showcasing an indirect presence in the Indian marketplace. It owns majority of shares in Paytm which is said to be the mobile commerce giant in India. It also has active investments in Snapdeal.
Previously because of FDI Alibaba or Rakuten would have a hard time in competing with Flipkart or Snapdeal but now the scenario has changed. E-commerce is a rising phenomenon in India. The growth rate in retail e-commerce was 133.8% in 2014 and 129.5% in 2015. Now, that the gates have been opened by Indian government, which a couple of weeks back approved 100 percent FDI in marketplace e-commerce, thereby embracing top-notch companies like Rakuten and Alibaba with open hands in the Indian e-commerce space without any legal issues.
India’s e-commerce is already clustered with giants like Flipkart, Amazon and Snapdeal. Flipkart seemed to be doing pretty well until Amazon entered Indian e-commerce. Amazon has already surpassed Flipkart in terms of traffic in less than three years of its launch.
Flipkart and Snapdeal are still facing losses along with tough competition. They need to raise funds in order to run gracefully. Another major challenge is Internet is not available to almost 80% of India’s population. While already maintaining a rank in the e-commerce space is a Herculean task. The entry of big-shot companies like Rakuten and Alibaba will only deteriorate the prevailing conditions of Indian start-ups. Alibaba has shown keen interest in Indian e-commerce market and is likely to enter this year itself. With Rakuten entering Indian e-commerce space, the competition is going to intensify.
India’s incumbent top players Flipkart and Snapdeal will find it harder to maintain their position and loyal customers. Alibaba and Rakuten have funds and are already established. Competing with them will mean Indian start-ups to come up with more unique and innovative options for the customers or to further increase discounts. Both ways the competition will be fierce.
Share with us your views about this awaited interesting battle of e-commerce giants in India.
