With e-commerce marketplace ShopClues’ recent fire sale to Singapore’s Qoo10 Pte Ltd, the third position in India’s e-commerce market will now be closely contested between Paytm Mall, which is backed by China’s Alibaba, and Snapdeal, which is back in the reckoning after an extensive restructuring.
What’s common for the two firms, experts say, is their business model. Both are seller-oriented marketplaces, where the focus is on adding thousands of small sellers, selling goods at very low margins to a fairly large economic segment. In contrast, India’s e-commerce leaders—Flipkart and Amazon—own large warehouses to store goods, which are then sold online. The two e-commerce giants have adopted convoluted structures in order to get around foreign investment laws, which bar direct online retailing by a foreign firm. For example, Flipkart has a separate business-to-business (B2B) commerce entity which supplies products to various third-party sellers who then sell to shoppers through Flipkart’s app and website.