Flipkart's retaliation follows an unusual direct attack by Snapdeal co-founder and CEO Kunal Bahl who told ET in an interview published on Monday that "whatever their (Flipkart's) numbers are, we will be ahead of them by March (2016)." Bahl also questioned the wisdom of fashion portal Myntra, which is owned by Flipkart, going app-only, describing the decision as the "most consumer-unfriendly idea I have ever heard of."
Snapdeal's salvo and Flipkart's counter-attack come just ahead of the festival season when consumer spending will be at its peak and retailers will compete aggressively for market share.
This year, the contest is expected to be particularly fierce because online retailers are backed by stores of investor money like never before.
Bansal, who co-founded Myntra, said Flipkart is aiming to sell goods worth $100 billion in 5-7 years, by which time he predicted that the retail industry would be worth $1 trillion with online sales accounting for 15-20 per cent of the total. "We will have more than 70% market share that will help us cross $100 billion," he said.
Flipkart's fashion category, including Myntra, has crossed $1.5 billion in gross merchandise value already, said chief business officer Ankit Nagori.
GMV is an important metric that online retailers use to measure growth, and valuation is dependent in large part on this number.
Companies are not obliged to publicly disclose GMV, and ET is not able to independently verify their claims.
So far this year, Snapdeal has raised $500 million from Foxconn, SoftBank and Alibaba while Flipkart is reported to have closed $700 million in funding. Amazon, the global leader, has committed a total of $7 billion for investment in India, and Paytm has suddenly emerged as a viable contender after securing about $600 million from the Alibaba Group.
The pre-Diwali sale will be closely watched, particularly because of the embarrassment for Flipkart last year when it botched its 'Big Billion Day' sale that was hampered by technology snafus and a clogged delivery network. This time the company says it is well-prepared.
Bansal, 39, defended the decision to take Myntra app-only, saying revenue is now higher than when the switch from the Web was made. "We have recovered and gained ground. Time spent on the app has gone up by more than 50 per cent," said Bansal, who estimated Myntra's GMV at over $500 million.
Online retailers are burning cash — Goldman Sachs estimates gross losses of 35 per cent on GMV — to win market share, but Flipkart's contention is that older categories are either profitable or close to profitability. "Our per-unit economics are twice as efficient as any other large player in the market. We are not dependent on financing for an eventual path to profitability," said Bansal.
New York-based Tiger Global, South African media conglomerate Naspers, Accel Partners and Russian billionaire Yuri Milner's DST Global are among the main backers of Flipkart, which was founded by IIT-Delhi graduates Sachin Bansal and Binny Bansal in 2007. Myntra was acquired by Flipkart last year.
Flipkart recently hired top technology talent from Google and Motorola to lead product development. Earlier this year, it reorganised its business into three main parts comprising ecommerce, supply chain and advertising.
Source :- http://timesofindia.indiatimes.com/tech/tech-news/Snapdeal-cant-even-be-as-half-as-big-as-us-Flipkart/articleshow/48771788.cms