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The global big boys of e-commerce have upped the ante to increase their share of the Indian consumer's wallet, but their home-grown rivals are holding their ground. The market share of online businesses like travel and job search suggests that local companies are faring better than the global ones present in India.
Travel site MakeMyTrip, for instance, is the largest e-commerce business in the country. According to an independent study by market research firm PhocusWright, MakeMyTrip has a 47 per cent share of India's travel market - down from earlier years due to the entry of new players, both domestic and foreign, but still quite large. Other major Indian companies in the field, Cleartrip and Yatra, control 20 per cent of the market each, while the others' share is 13 per cent.
There is a method in the success of these domestic internet firms. According to Citi Investment Research, "local companies with long operating histories have trumped global peers, which have so far been unwilling to modify their business models for India, a hybrid market that needs a large number of employees."
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The local companies, experts say, understand the Indian consumer better and are able to customise products and services to meet those needs. Investors and specialists tracking the internet space have concluded that Indian companies fare better in sectors or verticals where local knowledge and partnerships are more important than the technology platform.
MakeMyTrip has 1,000 employees looking at building and investing in partnerships - not only in India but in entire Southeast Asia, where Indians like to travel. Rajesh Magow, MakeMyTrip's co-founder and chief executive (India), explains: "Local partnerships with destination management companies make a huge difference in attracting travellers." Today, MakeMyTrip is much more than a travel portal; it has emerged as a travel solution firm offering a slew of products and services.
A big factor that has contributed to the success of these companies is their increased marketing spend and a much larger employee base. Indian search service provider Just Dial, for example, has 10,000 people gathering data, compared with Google's 52,000 people globally, says Citi. This is even as Just Dial's quarterly revenue is only $25 million, against Google's $11 billion.
Analysts say global travel website Expedia is not growing at a rapid pace in India because it employs only 700 employees, against MakeMyTrip's 1,700. The number of hotels with which Expedia has tied up is 6,000, against MakeMyTrip's 13,000 and Yatra's 16,000.
Local partnerships require local knowledge. Hitesh Oberoi, chief executive of InfoEdge (owner of job search site Naukri.com), says Indian companies continue to do well where the business is local - jobs, matrimony or real estate. In contrast, they might not score where the business is about technology platform.
So, you have Naukri.com that is three times as big as Monster Jobs in India. Oberoi says: "We have beaten Timesjobs and Shine.com. Monster is facing competition in other markets, too. They are in 32 countries but not leaders in any."
In the job space, Naukri has 38 million resumes, while LinkedIn has over 28 million in India, its second-largest market, next only to the US. Talent solutions account for 61 per cent of its total revenue, of which the Asia-Pacific region's share is nine per cent.
LinkedIn India's director for talent solutions, Irfan Abdulla, however, says: "LinkedIn is becoming a preferred partner for Indian companies. Data and analytics are becoming an important part of employment. Nobody has Linkedin's scale, even globally."
There might be a shift in the way companies look at social media for recruitment. But LinkedIn India's revenue at present is a mere 10 per cent of Naukri's, says Citi Research. Also, analysts believe LinkedIn, which has 350-400 employees in India, is reluctant to hire more in the country. By comparison, InfoEdge has 3,500 people on its rolls. However, since companies use LinkedIn for purposes other than recruitment - such as rebranding or changing employee perception - the social networking platform might be a threat to Naukri.
In the long term, the market might evolve and players could change their practices, but what is evident is that there is a clear link between marketing spend, headcount and growth. This explains the mad rush for talent and brand building.
Given that online retailer Amazon has committed itself to investing $2 billion in growing its India business, other foreign internet players are expected to follow suit. Unlike in the past, when some of these companies were not able to build scale for want of investment, there is a lot of money available today. In the past three years, $6 billion has been invested in the e-commerce sector - $3 billion of that in the past three months alone.
THE PECKING ORDER
Job search
- LinkedIn India has 28 mn resumes vs Naukri's 38 mn
- Naukri is three times the size of Monster India
- LinkedIn's India revenue is 10% of Naukri's revenue
- LinkedIn India's profit is 5% of the standalone profit of InfoEdge (which owns Naukri)
- MakeMyTrip is the largest online travel firm in India, with a 47% market share
- Expedia, present in India since 2008, has not yet captured double-digit market share
- Expedia has tie-ups with 6,000 hotels in India, against MakeMyTrip's 13,000
- Flipkart is clear leader, with a much higher share of unique visitors every month
- Amazon's unique visitors are 60% of Flipkart's at present (20% a year ago)
- Amazon plans to double headcount to 10,000, while Flipkart plans to double strength to 25,000
