The Four “Horsemen” of India’s Tech Ecosystem

My first article on Pakistan’s tech ecosystem was a holistic look at seven startups incubated in Plan9’s first batch. It was a smart idea from a friend that gave me, and presumably my audience, a helicopter view of the entire ecosystem. And proved instrumental in setting the context for what I wrote next. I am hoping to do the same with this article, only this time we are talking about India. Also, while I believe these four startups are the most important ones right now, there are more. And I don’t think they spur on their own. Like everything else, these startups are built on shoulders of others. I like to think India’s early foray into IT outsourcing from the late 80s and resulting culture has a big role to play.

Flipkart, Snapdeal, and Paytm Mall

I am clubbing them together because they are competing in same eCommerce space. Flipkart is the poster child of India’s tech ecosystem. Founded by two brothers in 2007, it’s the highest valued startup in the country. And the idea is clearly inspired by Amazon. Actually, the founders worked there before coming back to find their own. They are the largest player in the category with every third Internet user in India being a user of either their website or app. Earlier this year eBay invested in Flipkart and as part of the deal, Flipkart now owns eBay India too (though the later operates separately).

Snapdeal was originally a deal service. It got you the most exciting deals in the town but eventually turned into online shopping. It’s smaller of the two homegrown players in eCommerce. Flipkart tried to buy them a few months back but founders turned it down. While Paytm is also homegrown, it’s eCommerce wing i.e. Paytm Mall is not. Alibaba holds the controlling shares and is more of an Alibaba thing than Paytm. The fourth player is well, you guess, Amazon.

Together, as of now, Flipkart, Snapdeal, and Amazon own 75% of the market share. But it’s Snapdeal that seems in hot waters moving forward. From Tech in Asia:

Amazon’s commitment of US$5 billion to the relatively open Indian market, after finding the going tough in China, transformed the market dynamics. Flipkart and Snapdeal, which were in a race to grab market share with discounts, suddenly had the rug pulled from under their feet.

Amazon could offer better prices as well as selection and back it up with world-class services like Amazon Prime Video. The biggest loser was Snapdeal, which saw its market share dwindle. Flipkart managed to stay the course and inspired sufficient confidence for Tencent, eBay, and Microsoft to infuse it with fresh funds.

This leaves three big players in the market – Paytm ecommerce backed by the cash-rich Alibaba, the rejuvenated Flipkart, which could achieve a bigger market share through the acquisition of a marked-down Snapdeal, and Amazon.

Personally, I believe the news is troublesome for Flipkart too. Recent rejuvenation aside it’s dangerous to play in the same field as Amazon and Alibaba. Both can go on and on without making a dime. The longer it goes more trouble it spells for Flipkart.

Ola

Ola completed seven years of operations yesterday and they posted this on Twitter.

Yup, that’s how much services they are offering right now. Also, their lead on Uber is much bigger than I thought it to be. From Tech in Asia:

The advantage Ola has gained here is significant as the share of auto-rickshaws in rides booked online rose to 10 percent in the third quarter of this year, compared to a mere 3 percent in the same period last year. The number of auto-rickshaw rides booked via ride-hailing apps went up from 5.5 million in Q3 2016 to 18.5 million in Q3 2017, according to RedSeer Consulting.

Ola’s wider play is reflected in its presence in over 100 Indian cities, compared to Uber serving only the biggest 30. That’s a strategic differentiation because Uber is focusing on doubling down and winning in the major cities, which contribute the bulk of the revenue. Ola, on the other hand, could have an early mover advantage by going into areas which are yet to gain momentum.

While part of this has to do with Uber being more vulnerable recently but that will be not giving the credit where it’s due. Ola is definitely playing a different game than Uber. They understand the market well and are responding to it quickly. Plus they know what their advantage over Uber is i.e. being local, early and later’s vulnerable state. And they are doubling down on it.