Home Retail Biyani cries consolidation as Flipkart, Snapdeal fight on Twitter

Biyani cries consolidation as Flipkart, Snapdeal fight on Twitter

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The founders of and – the two largest Indian e-commerce retailers – took their online rivalry onto the social media space. The trigger – Chinese e-commerce major ’s entry into India.

Biyani cries consolidation as Flipkart, Snapdeal fight on Twitter
Future Group CEO Kishore Biyani says the Twitter spat between e-commerce poster boys Bansal and Bahl could mean a consolidation wave triggered by Alibaba

On Friday evening, Flipkart’s tweeted: “Alibaba deciding to start operations directly shows how badly their Indian investments have done so far.”

Snapdeal’s responded with an equally acerbic tweet: “Didn’t Morgan Stanley just flush $5 billion worth market cap in Flipkart down the toilet. Focus on ur business not commentary :)”

The reference was to a mutual fund managed by Morgan Stanley marking down the value of Flipkart’s shares by 27 per cent, signalling that global investors believe India’s largest Internet company may be overvalued. Flipkart had said in a press statement that it is valued at $15.2 billion. A 27 per cent drop would put this at $11 billion.

According to a report in The Economic Times, CEO said the Twitter spat between India’s e-commerce poster boys could indicate a consolidation wave triggered by Alibaba’s imminent entry into the space.

Biyani, who runs the country’s largest brick-and-mortar retail company and and who had accused online retailers of adopting predatory pricing two years ago, is known to disparage e-commerce rivals. He said social media had become the medium of engagement for many entrepreneurs. “Very often I see conversation as a precursor to hint something strategic or big. In this case, it could even be consolidation or something more,” he was quoted in The Economic Times report as saying.

Earlier this month, he released a series of ads targeted at the three main online marketplaces Flipkart, Amazon India and Snapdeal.

The consolidation buzz in the e-commerce space has been strengthened by talks swirling around Flipkart. The Economic Times had reported on failed talks between Flipkart and Amazon – a report which Flipkart founders Sachin Bansal and had denied.

Meanwhile, stocks of Future Retail, Future Consumer and Future Lifestyle Fashions have gained 14-80 per cent on the BSE and have a combined market capitalisation of $1.5 billion.

Last month, investor Rakesh Jhunjhunwala said e-commerce companies were attracting too much investment without any meaningful retail disruption and was bearish on the business model. “I will consider buying Flipkart’s stake if it is valued at $100 million,” he had been quoted by The Economic Times as saying.

The combined losses of the three leading online retailing platforms widened to Rs 5,052 crore in FY15 as they spent heavily on infrastructure and discounts to woo consumers.

THE BUZZ AROUND ALIBABA

Alibaba, so far a passive investor in Indian companies such as the Kunal Bahl-backed Snapdeal and Vijay Shekhar Sharma’s One97Communications that operates Paytm, had last week announced its full-fledged entry into the Indian e-commerce space.

Last week after meeting Communications and IT minister Ravi Shankar Prasad, Alibaba group president J Michael Evans told reporters in Delhi: “We are planning to enter the e-commerce business in India in 2016. We have been exploring very carefully, the e-commerce opportunity in this country, which we think is very exciting against the backdrop of Digital India.”

The move is all set to put Alibaba’s founder in head-on competition with Amazon’s founder , in India. The country’s top e-commerce player Flipkart, founded by Sachin Bansal and Binny Bansal, would also need to strategise to keep its top position.

Alibaba has invested more than $500 million for a 40 per cent stake in One97 Communications, which runs Paytm, a wallet and ecommerce company, while Snapdeal raised $500 million from a clutch of investors including Alibaba last year.

The Economic Times had reported that Alibaba was talking to the Tatas for a broader strategic alliance besides deepening its relationship with Snapdeal.