The world’s fastest-growing e-commerce market, India is seeing a growth at an annual pace of over 31% over the next five years, hitting $64 billion in revenue by 2021. Naturally, Amazon (NASDAQ:$AMZN) has been aggressively vying for market shares in this industry, having already invested over $2 billion. However, despite Amazon’s recent dominance over the North American market, things were a little tougher abroad in India. Especially when confronted by domestic e-commerce company Flipkart, which has charted out a smart strategy to sustain its growth in defense against foreign competition.

Who is Flipkart?

Flipkart’s total funding is way lower than that of Amazon’s. The Indian e-commerce giant has raise a total of $7 billion over the past decade, including the recent $2.5 billion infusions by Softbank. As a point of reference, Amazon is on track to invest $5 billion to make a dent in the Indian e-commerce industry.

In June, Flipkart’s sales outperformed Amazon’s turnover in the region by over 8%. Flipkart believes that they can accelerate sales by 60% in the current financial year after recording around 40% the year prior.

So, what’s the recipe to Flipkart’s success? The company focuses on boosting its network in Tier 2 and Tier 3 cities in the country. Last year alone, out of all Flipkart’s new customers, 65% came from such regions. This year, they have added 50 new delivery hubs while servicing an additional 1,000 zip codes across Tier 2 and Tier 3 cities in India.

What is Amazon’s response? For starters, the company has a more diversified sales mix, thanks to its focus on categories such as groceries, books, and other electronic items. Further, Amazon plans to leverage its Prime service in customer retention, offering movies and shows through Prime Video at a very nominal rate. At the end of first quarter 2017, Amazon commanded 44.6% of India’s ecommerce market, whereas Flipkart commanded 35.7%.

It is evident that while Amazon is following a more holistic approach to target the Indian e-commerce market, Flipkart is banking on their channel-specific, and demographically tailored growth strategy. It will be interesting to see whether Amazon’s plan works out in foreign markets.

Featured Image: twitter