Amazon has launched in India. The way which they have entered the Indian market is of particular interest to me. Junglee.com which is partly owned by Amazon is wait for it, a comparison shopping engine. I initially thought that they would look at acquiring one of the popular ecommerce operators such as Flipkart, Naaptol or Myntra etc but it seems that either the Indian ecommerce valuations is too high or this is phase one of something bigger. More on that in a bit as I think Amazon is both playing offence and defence with Junglee.
Why would Amazon go into India via a comparison service? Well it would be the ultimate sign of analysing the Market. I can’t prove it but I think Amazon does not do anything without measuring it. Junglee will provide them with true analysis of which Indian ecommerce operator / startup to acquire. I don’t see Amazon acquiring Flipkart soon as I believe Flipkart wants to own their independence ala facebook. Remember that Flipkart is funded by 2 venture capital firms that have been to this dance before. Accel Partners and Tiger Global Management, I think will want Flipkart to go public before they exit from their shareholding.
I have deep respect for both of these investors as I think they have incredible knowledge and data on developing economies. Also both of them recently took part in a new round of funding into Flipkart. The valuation was a whopping $850 million.
Holistically from Amazon’s point of view, Amazon has always ensured that they keep their finger on the pulse in key markets. Thorough their Zappos acquisition showed that Amazon is willing to pay top dollar for a company that dominates a specific vertical.
I had a look for more information on this and Ben Parr then at Mashable:
Several months ago, they reached out to us and said they wanted to join forces with us so that we could accelerate the growth of our business, our brand, and our culture. When they said they wanted us to continue to build the Zappos brand (as opposed to folding us into Amazon), we decided it was worth exploring what a partnership would look like.
However not all of this is good regarding Junglee:
- Flipkart is a trusted brand for millions of Indian online shoppers. Junglee is at the moment an unknown. This is a huge deal when you are going into a new market. Developing economies have their individual challenges but trust is only solved by education. Junglee has that all to do whereas Flipkart already has users using them.
- The other question that I have to ask is why does Junglee not have Amazon products listings? The Marketplace concept is where Amazon.com dominates in the developed world. By having Junglee operate as a Comparison Shopping Engine any Amazon listing will be highlighted. A successful Comparison shopping engines is unbiased and sends highly qualified data to its partners. CSE’s are aimed at the user and education whereas a Marketplace is aimed at retailers.
Amazon I think is on a full scale offensive in terms of international expansion and I have feeling that Junglee is only one part of a bigger entrance into new parts of the world. China is also getting alot more attention from the Seattle Company through more investment.
The Seattle-based company Monday signed a deal with the Economic and Technological Development Zone in Nanning to build its distribution center in the city, capital of Guangxi Zhuang autonomous region, said a statement released by the zone’s management office.
The center, with an investment of 600 million yuan ($95 million), will generate an annual output worth at least 200 million yuan after it starts operation, said the statement, without elaborating on the timetable.
Bezos I believe has realised that the developed markets have reached saturation in terms of growth and thus the full scale investment outside Europe and US seems makes sense. Look for new markets, enter them and then over a period of time become market leader.
The next markets I think they will look to enter: Brazil and South East Asia. The more I research Amazon and their philosophy, the more I realise that you never bet against Jeff Bezos and his band of merry men. They have something that no other ecommerce company has – a global brand that is used and respected worldwide.