Amazon India chief terms rival’s GMV valuation as vanity metric

Refuting the findings of some research reports that declared Flipkart the market leader based on gross merchandise value figures during the recent festive season sales, Amazon's India head Amit Agarwal said he believes GMV-based valuations are vanity metrics.

Agarwal said Amazon is the largest online retailer in India while rubbishing the market research reports that claimed the retailer trailed behind Flipkart in the season sales, Mint reported.

According to a recent RedSeer report, the gap between the top two players had widened this year with Flipkart emerging as a clear leader. In 2016, the consulting firm had said that Flipkart and Amazon were in a neck-to-neck fight.

RedSeer claimed that Flipkart dominated the market and the Softbank-funded ecommerce firm saw its gross merchandise value market share increase to 58% from 50% in 2016.

However, Agarwal claimed that more than 70% of its customers from last Diwali came back to the website and many of them did multiple purchases this time. He said one out of every five repeat customers became Prime members.

“In terms of GMV, I have always said I don’t understand the metric. I find that a vanity metric. And we don’t optimise our website to run a single day of sale—that’s not how we run our website. What I can tell you is that all the claims made out there are wrong, knowing my data…Those are completely wrong,” Agarwal told the financial newspaper.

According to the report, Amazon plans to double down on its investments, especially in its digital payments and the Prime membership programme.

In 2014, the company had invested $2 billion in India and had committed another $3 billion in June 2016, taking its total investment in the country to $5 billion.

Earlier, Amazon said its festive season sale ‘The Great Indian Festival’ was its biggest shopping season so far, claiming that it had 44% of total customer share during the festive sales. Quoting an IMRB study, the global giant said it had more transacting customers than any other online destination and had the highest number of customers as well as the maximum number of orders placed through the festive season.

According to Amazon, 86% new customers came from beyond tier 2 cities and one of three customers shopped on the website across multiple days of the event. The company also claimed that the event accounted for the biggest sale of smartphones in 2017.

Flipkart had said that its market share during the festive sale period was over 70% of the e-commerce segment in India.

When asked on the overall performance of Flipkart during the festive month, Smrithi Ravichandran, senior director, business development, Flipkart, said: “We have had phenomenal sales this festive season. Flipkart stood out as the winner of the festive season sale on the back of some great consumer finance programmes. We saw a large amount of sales being driven all through the festive season by our innovative affordability constructs such as no-cost EMIs, buy-now-pay-later and product exchanges.”

Smartphones, fashion, large appliances and consumer electronics continued to remain the top categories on Flipkart. “Flipkart now commands a 70% market share in the online smartphones market. In fashion, together with Jabong and Myntra, we hold 80% of the entire online market for fashion. In the large appliances category which includes TVs, refrigerators and washing machines, Flipkart commands 60-65% market share,” Ravichandran said.

While not commenting on the total GMV it achieved during this season, she said that the homegrown company had garnered a disproportionate market share across all parameters, making everyone else irrelevant.

“The trends were consistent with the observations of other independent research and surveys, which have also said Flipkart was the unquestionable leader this festive season,” Ravichandran sadi.

Last month, a RedSeer report claimed that Amazon’s share had dipped to 26% during the season as compared to 32% recorded in 2016.

“This year pretty much has been the year of Flipkart. They have taken away the market share not just from their biggest competitor (Amazon), but also from the whole industry. Flipkart really dominated the five-day sales this year,” Mrigank Gutgutia, engagement manager at RedSeer, had told VCCircle.

However, Manish Tiwary, vice-president of category management at Amazon India, said: “There are no credible, recognised research reports at present in India with robust methodology and significant sample size to provide objective market share reports. We have noticed poorly informed speculative reports with irrelevant sample sizes. The numbers do not add up to what we are seeing in the industry.”

“What we can say based on our data is that we remain the largest marketplace in India and the fastest growing,” Tiwary said.