India’s major online retailer, Flipkart has acquired smaller rival Letsbuy, signaling intense competition with global player Amazon in future. The Flipkart move can be read as a reply to Amazon’s last week acquisition of the Indian shopping site junglee.com. Amazon is awaiting the opportunity to enter into the Indian market, and has started their informal operation center at Mumbai recently. At present, Amazon is blocked by the government’s FDI restriction in multi-brand retail trade.
The e-commerce industry in the country at present is the fastest growing business sector. It has registered volume business and has shown signals of entering into a take-off stage. Flipkart was founded by two former Amazon employees in 2007. It started with online book selling, and expanded into the electronic goods markets. Flipkart has acquired brand name and large scale business especially over the last one year. Because of the growth of larger players, smaller national players like Letsbuy were finding it difficult to survive.
Amazon’s acquisition of junglee has invited attention as well as surprise because of the restriction on FDI in the multi-brand retail sector. But Amazon has insisted that junglee is not a trading platform. The Amazon move indicated that the MNC retailer from the US is not ready to wait until the removal of the restriction on multi-brand FDI to develop its position in the Indian market.