Electronic commerce company Flipkart has recently announced that it will be purchasing eBay India. This is in an effort to further their influence in the country against rival company Amazon, and is surely a move which will serve to heighten competition between the two. This article will look at some of the possible effects of Flipkart’s move.
The first impact of the deal is that it will greatly strengthen Flipkart’s presence in the Indian ecommerce market. eBay is known as one of the largest ecommerce companies in the world, rivalled only by their counterparts Amazon, so this will no doubt be a blow to Amazon’s influence in this market.
As one of the fastest growing economies in the world, India is no doubt viewed as an important market to be a part of, and Flipkart’s new market position will no doubt secure them steep profits in the future.
As part of the deal eBay has also invested $500m in Flipkart in order to strengthen its own position against Amazon and no doubt try to weaken its long-time rival. This alignment with a company which was previously a competitor is a bold and controversial move, but one which will no doubt foster a strong partnership between the two.
This also shows that eBay is looking at playing a long-term game when it comes to overall market expansion, and is willing to take a risk in order to further expand their position in the ecommerce market.
Amazon, however, has also been busy in India, forming two new deals for Prime Video in order to exploit the lucrative market. The fact that eBay felt the need to make such a major deal with Flipkart actually suggests that they feel a significant threat from their global market rivals.
There will undoubtedly be a fightback from Amazon in a market which is too profitable to hold back on. With its overall size and wealth, perhaps it will look to forming more alliances of its own in India in what will surely be a significant rivalry in the coming years.
The interest in India from these global corporations is likely to boost the economy and bolster the rupee, which could impact forex trading. The competition between these two goliath companies may also benefit Indian residents who use ecommerce extensively, as prices may be driven down and deals upped in a bid to win over customers.
Other large companies may well follow suit and start to extend their influence by making deals with established Indian firms. This could see India’s overall wealth increase swiftly, and cause it to be a global economic force to be reckoned with in the future.
Flipkart’s purchasing of eBay India is an emphatic move and one which will no doubt have far reaching consequences in the Indian market. Rivals Amazon will have their work cut out as they now have to face the effective might of two companies merged into one. The greatest benefits of this competition, however, may be felt by the Indian economy itself.