How long before Amazon forces its Indian rivals into a merger or sale?


Pressure is mounting on Flipkart and Snapdeal

Three years into Amazon’s aggressive push in India, the country’s two home-grown e-commerce competitors are feeling the pressure.

According to a report in India’s well-respected Mint newspaper, Amazon’s sales in India eclipsed those of No. 1 Indian competitor Flipkart for the first time in July. Sales at Snapdeal, another well-funded competitor, are much smaller than either, according to the report.

Flipkart has also recently given much more control to an executive, Kalyan Krishnamurthy, who was a managing director at Tiger Global, the New York City-based investment firm that has made a huge bet on India and Flipkart specifically. The increased scope of his role could be seen as a move by Tiger Global to steady Flipkart’s operations as Amazon continues to pour billions into Amazon India.

Both Flipkart and Snapdeal have raised more than a billion dollars, but have historically recorded big losses as they’ve engaged in discounting battles with each other and with Amazon. Amazon has made it clear it is willing to spend big to become the No. 1 e-commerce player in the country after failing to make a dent in another huge international market, China.

Now, it seems like every week there’s a new rumor of the two homegrown players considering a merger or sale. Alibaba, which owns a stake in Snapdeal and another Indian player, Paytm, is often in the conversation.

In any potential talks, however, Flipkart and Snapdeal’s frothy valuations could be a problem. Flipkart was valued last year at $15 billion while Snapdeal most recently secured a $6.5 billion valuation.

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