What Google's Foray Into E-Commerce Means For India

by Rajarshi Choudhuri    Jul 02, 2018

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Google seems to be grabbing opportunities in the Indian e-commerce market. According to reports, the American multinational tech company is looking at a possible Diwali 2018 debut into the e-commerce market. What does Google’s speculated foray into the e-commerce space and what it mean for the India market?

The e-commerce space in India has grown from strength to strength since the past half a decade. Between homegrown players taking on the likes of Amazon and foreign investors pumping money into the ecosystem, the scene has been absolutely stellar.

Online retail firm Paytm Mall was the first to manage something incredible by going Unicorn with the combined funding from SoftBank and Alibaba (along with Alipay). The funding which was reported to come in four tranches would give SoftBank Vision Fund 21% possession with the fourth and final tranche. Alibaba (and Alipay) would claim 46% share in Paytm’s online marketplace venture. The Japanese global conglomerate however is not new to investing in this ecosystem - their last venture being funding Flipkart in 2017.

More good news was to come in this front with talks of Walmart acquiring Flipkart. In May 2018, the world’s biggest e-commerce deal went through as Walmart acquired Flipkart at $16 billion with a valuation of over $20 billion. The acquisition gave Walmart 77% ownership of Flipkart. These high-profile acquisitions and funding indicates that the e-commerce space in India is ripe for the taking.

The major contributor of the e-commerce boom in India is the mobile phone and internet market. The penetration into tier-II and tier-III cities has made it possible for more Indians to shop online. According to a study conducted by coupons and deals company, GrabOn, the country boasts of more than 4 billion mobile phone users with over 600 million added to the number yearly out of which 400 million are smartphone users.

The Indian e-commerce sector currently evaluated at $38.5 billion is poised to grow into $100 billion juggernaut by the year 2020. The interest shown by Google in foraying into the country’s e-commerce industry shouldn’t come as a surprise, in fact the plan has been in works for the better part of a year now. However, Google has been playing this venture rather close to its chest with Caesar Sengupta, VP, product management helming the secretive project. This entry into Indian e-commerce would serve as a chance for Google to test the waters before moving onto other emerging markets. If insider scoop is to be trusted Google was in talks about investing in Flipkart (reported sum of $2 billion) before the Walmart deal went through. Now, as the situation stands it appears Google will follow Amazon’s suit for a solo launch into the Indian e-commerce industry.  

Google’s interest in entering the e-commerce space is further evident from the investment the MNC made in the Chinese e-commerce company JD.com. The $500 million investment by Google will go towards developing the market along with JD.com, who had partnered with Walmart earlier.

Before diving into the lucrative e-commerce market Google has taken certain steps to make sure that they fully understand what they’re dealing with. The company has been organizing workshops in an effort to identify and network with the potential sellers and merchants. So, far as reports suggest, the Google e-commerce platform has already onboarded more than 15,000 vendors. Google Tez has also helped tremendously in this information gathering effort. With its ‘Saathi’ initiative, Google is trying to reach into the untapped market in the rural areas. This initiative will assist people in shopping online who normally wouldn’t be comfortable in doing so. 

Google’s e-commerce vehicle will be leveraging Gmail’s 18 million+ subscriber assets as well its paid advertisement listing channel, ‘Google Shopping’. The multichannel sales approach along with integrated customer experience will bring more and more brick and mortar stores to the digital fold. The listing service along with Google maps will provide much better visibility to sellers than any other marketplace platform. This will be incentive enough for more and more vendors to start listing on Google’s e-commerce platform.

The approach that Google seems to have taken here is one driven by a lot of brainstorming and careful delay. This would avoid unnecessary marketing spend and prevent revenue drain in the form perennial discounts and offers.

Experts believe that the Indian e-commerce scene is very conducive right now and shows no signs of slowing down anytime soon. In fact, according to the Research Director at Gartner, Adrian Lee, the present evaluation shows that close to 15% Indians would be switching to online shopping before 2018 ends, that would come to 200 million! This is an opportunity Google wouldn’t let go.

[The author is a content strategist and startup enthusiast with a keen eye for technology and investment in the ecosystem]