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India 2015: OVERVIEW | Key Themes: Disruption

Fast growing e-commerce, mobile brands may soon enter the Top 50

Dynamic categories portend market disruption

Brand leaders in two of India’s fastest-growing and disruptive categories – e-commerce and mobile handsets – are expected to soon appear in the BrandZTM Top 50 Most Valuable Indian Brands.

The brands in these categories, such as e-commerce leader Flipkart and Micromax, a handset maker, are not only rapidly growing sales and market share, they’re also developing ecosystems that influence consumer purchasing across categories.

The brands are attracting billions of dollars from foreign investors and creating new marketing avenues that are uniquely Indian and reach individual consumers anywhere in the country in low-cost, targeted ways.

Investors are betting on these brands because India is one of the world’s largest markets and the one place on earth where five homegrown online marketplaces compete, but none dominates.

These India e-commerce brands – Fashionandyou, Flipkart, Jabong, Myntra and Snapdeal – compete not only with each other, but also with Amazon, which entered India in 2013, and Alibaba, which launched in India during the summer of 2015.

Amazon’s presence in India for several years is especially significant. It means that the substantial growth of Indian e-commerce brands, and their ability to gain the confidence of foreign investors, occurred when they competed with the company that literally wrote the book about succeeding in the e-commerce business. 

Flipkart outscores Alibaba in Brand Power metrics

Indian e-commerce leader Flipkart scores higher in Meaningful, Different and Salient in India than China’s Alibaba scores in China and globally, in these three metrics that comprise Brand Power. 

Competing with Amazon no doubt sharpened Flipkart, Snapdeal and the other Indian e-commerce players. Flipkart scores higher in Meaningful, Different and Salient in India than China’s Alibaba scores in China and globally. Flipkart scores 248 in Salient (unaided awareness) in India, for example, while Alibaba scores 143 in Salient in China and 142 globally. A score of 100 is average. These three metrics comprise Brand Power, the BrandZTM measurement of a brand’s ability to grow sales volume and market share.

Competition among Indian brands and Amazon – and now Alibaba – will be fierce, and the surest winner of this face-off will be the mobile phone sector. Over 40 percent of e-commerce purchases in India are made with mobile devices, according to some estimates, compared with less than 35 percent in China, 20 percent in Brazil and below 15 percent in Russia.

Some of the leading Indian smartphone brands – Intex, Karbonn, Lava and Micromax – rapidly moved up a brand development curve. Launched in 1991, Micromax produced low- priced products until Chinese value brands entered the Indian market and undersold Indian brands. Micromax then quickly repositioned as a brand offering quality smart phone performance without the Samsung or Apple premium.

To build that reputation internationally, the brand engaged actor Hugh Jackman as its spokesperson. Micromax has generated significant foreign investment. Over the past five years, Micromax has grown 389 percent in Brand Power. Competition intensified recently when the Chinese brand Xiaomi, which sells its mobile handsets in India, started also assembling them India.

Micromax, and the other mobile handset brands, don’t yet appear in the ranking, either because they’re not publicly traded or they fall somewhat short of the threshold brand value. The e-commerce brands are not publicly traded. These circumstances could change imminently.

The entrance of a powerful brand can dramatically impact a BrandZTM ranking, as illustrated by Alibaba’s inclusion in the 2015 Global Top 100, following the brand’s IPO. Alibaba immediately rose to the number one rank in the retail category, surpassing Amazon and Walmart in brand value.

The inclusion of the leading e-commerce and mobile headset brands in the BrandZTM India Top 50, will broaden the number of categories represented, reflecting the growing diversity of the Indian economy as new upstart brands increase in value and balance the historical brand value contribution of the financial services sector.