Sundar Pichai-led Google is seriously considering entering into e-commerce and India could be reportedly the first stop. The launch could coincide with Diwali later this year, a source said.
With such a move, Google would be a direct competition to both Amazon and Flipkart in a sector pegged at around $38.5 billion and projected to grow to as much as $100 billion by 2020 in the country.
Google and Flipkart
While the American major was showing interest to invest at least $2 billion in Flipkart post the Walmart deal, it may have subsequently decided to opt for the route that Amazon had taken five years ago to launch solo in India, another source said.
‘’Google started having second thoughts as it felt that the valuation that SoftBank Group, Tiger Global (investors in Flipkart) quoted was inflated,’’ said a Flipkart executive who preferred to stay anonymous. After its deal with Flipkart, Walmart announced that it was hoping some other global investors would now buy a stake in the firm. The impression it gave out was Google would invest at a later stage. However, Google is learned to have backed out after witnessing how Walmart’s shareholders were getting apprehensive about the $16-billion Flipkart deal.
Google venturing into e-commerce
In an indication of Google’s growing interest in e-commerce, earlier this week, the California-based firm announced an investment of $550 million in JD.com, a leading Chinese e-commerce company. The two companies said in a statement that it was part of a strategic partnership to jointly develop markets. Walmart and JD.com had also entered a strategic partnership earlier.
According to people in the know, Google’s India e-commerce plans have been in the works for close to one year, but “rather secretively’’. The initiative, being spearheaded by Caesar Sengupta, who leads product management at the global headquarters, is likely to test the e-commerce launch in India before going to other emerging markets, sources pointed out.
In the run-up to the likely launch of e-commerce, Google has taken steps to understand the universe it wants to get into. For instance, it has been associated with some 2,000 workshops helping the company to identify sellers on its e-commerce platform. It has also partnered with business chambers for digital programmes. Many pilots are being scaled up to meet the e-commerce target, a source pointed out. Also, more than 15,000 sellers have been identified for the Google e-commerce platform. In fact, Tez, a payment app under the Google umbrella, was launched with the idea of populating the seller database, a source said.
Google has plans for rural India as well. Mainly through its ‘Saathi’ initiative. Through 48,000 saathis across rural India, Google wants to offer assisted shopping until the masses are comfortable with the process.
In preparation, the tech giant has been refining Google Shopping, which is its paid advertisement listing service. The company plans to make it more of an omnichannel experience to encourage brick and mortar retailers to list with Google. The company has launched this service in the US where it allows offline retailers to see what is in their stores for free as well as mark on Google maps. The company plans to launch this feature along with several others to increase the number of sellers on its platform.
The estimated 18-million subscriber base of Gmail will help Google’s e-commerce, an analyst said. Also, the vernacular features are likely to give the company insight into millions of shoppers, he added.
Explaining why the company waited this long, a source quoted above said Google wanted to understand the India market better. ‘’It believes that it is better to have a budgeted spend than unbudgeted and unlimited discounts that the other cash cow businesses have to fund in perpetuity,’’ he said.