Thursday, August 14, 2014

Flipkart-Amazon Battle Pits Murthy Against Premji




IT czars Azim Premji and Narayana Murthy are now rivals in a different sector: e-retail. And soon they could face another rival in former Tata Group chief Ratan Tata.

Tata Sons Chairman Emeritus Ratan Tata recently said that e-commerce is one of the areas where is he looking to personally invest because of its "good potential" as a large proportion of the country's consuming public do not have the required access to goods.

Wipro founder and chairman Azim Premji through his investment company Premji Invest is an investor in domestic e-tailer Snapdeal. Mr Premji has also invested in fashion e-tailer Myntra, which was recently acquired by Flipkart.

Infosys co-founder Narayana Murthy already has a venture in e-commerce space. His private investment firm Catamaran Ventures has a joint venture with global retail giant Amazon to help get Indian companies online. Catamaran Ventures partnership with Amazon will help small- and medium-sized firm sell goods online. In June this year, Mr Murthy stepped down as executive chairman of Infosys.

Access to mobile devices and better-quality broadband has boosted India's online shopping scene. Online sales of retail goods totaled $2 billion, or nearly Rs. 12,000 crore, in 2013, according to research firm Forrester. Technopak forecasts sales are expected to reach $76 billion (Rs. 4.56 lakh crore) by 2021.

This has boosted excitement in the Indian e-commerce sector. Flipkart, India's largest e-tailer, recently raised $1 billion in a fresh round of funding as it tries to aggressively scale up after Amazon.com's rapid expansion in the country has heated up competition. After the funding, Flipkart has been valued at a $7 billion, according to estimates.

Flipkart co-founder Sachin Bansal told NDTV that India can produce many billion dollar internet firms. India's internet ecosystem is going to be one of the most vibrant in the world with half a billion internet users, he added.

Immediately after Flipkart's funding announcement, Amazon said it would be putting in an additional investment of $2 billion into its Indian operations.

Investor interest in Indian e-commerce space could further grow if the government eases foreign direct investment norms. India currently bans global online retailers from selling goods directly to customers but allows them to own 100 per cent of a marketplace business, where third-party suppliers can use their platform. Both Amazon and eBay use such a platform to operate in the country.

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