In this segment from Market Foolery, Chris Hill, Jason Moser, and Taylor Muckerman consider the rise of e-commerce in the world's second most populous nation and the huge opportunity it presents to early movers in that market. The two biggest players include Flipkart, backed back some major American and Chinese companies, and the leader in online retail, Amazon (AMZN 0.58%).

Who will come out on top?

A full transcript follows the video.

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This video was recorded on April 10, 2017.

Chris Hill: The e-commerce battle in India is starting to heat up. Flipkart, which is an e-commerce start-up in India, has raised $1.4 billion from Microsoft, eBay, and Tencent. This puts Flipkart's valuation at about $11.5 billion. Part of the fundraising in this round involves Flipkart acquiring eBay's operations in India. Let me go back a little bit to give some context here. Last June, one of the stories we talked about on Market Foolery was Amazon investing $3 billion to their operations in India. A few of the dozens live in India, so at that point, I asked any of our listeners who lived in India to share their experience with e-commerce and got some phenomenal information back from folks. Flipkart is one of those brands I was completely unfamiliar with, and it was actually started by some guys who used to work for Amazon in the United States. Jason, even if you take into account the valuation of Flipkart coming down a little bit, these are serious backers in the likes of Microsoft and Tencent and eBay.

Jason Moser: Yeah, serious backers in a very serious market. This isn't something that's going to materialize over the next two years. I think, really, you have to look at this from the perspective of the next decade. And certainly, it seems like Flipkart has established itself as a pretty credible presence there, based on the feedback we got from our listeners last year. So I think the one thing that would give me pause when it comes to Flipkart is, essentially, I think the clock is ticking. And I think it's moving a little bit faster for Flipkart than it is for Amazon. Flipkart is a little bit more under the gun and needing to raise capital and really building out this business. I think they have, obviously, the founders have a good idea of what Amazon is all about, and how Jeff Bezos has built that business, why he built it the way he has. So, I would like to believe that they are focused on some of the very things that he's been focused on, primarily, awesome customer service, then low prices as well. The thing is, Amazon is already so successful and so big, and has really already done it here domestically -- I mean, that's what they're doing, they're taking what they've done domestically and doing it elsewhere. So, we're seeing the European operation, for example, coming online. And we see that operating profit starting to strengthen there as they continue to realize more return on those investments. We're watching them try to do the same thing in markets like China and India and the Middle East acquisition that they just made there. So, I think that is just where the biggest challenge for Flipkart lies. Amazon has a little bit more luxury here in the form of capital and time and, obviously, the know-how. They've learned a lot from their successes and their failures. But it does seem like Flipkart is onto something here. When you're raising that kind of money, and your company is valued anywhere between $10 to $15 billion, you're doing something right.

Hill: Absolutely.

Taylor Muckerman: With your competitive advantage, if you're just trying to beat Amazon, against Amazon, I think you're running up against a wall there. Amazon is already No. 2 in e-commerce in India, and they've only been there since 2013. $5 billion from them versus a few billion from these other companies, a little smaller bet for Microsoft, because it's only chipping in, whereas Amazon is putting their own money into this and they're doing it on their own. I think it's a great market to get into because you saw in November of last year when Prime Minister Narendra Modi removed the 500 and 1,000 rupee notes out of circulation, which was, I read, about 86% of cash in circulation. So, the country is not yet set up for a cashless society, but they're certainly trying to move in that direction -- 1.5 billion people, and you have only about 40 million that have used online e-commerce. Huge market, but like you said, it's not going to be a couple years where you really start to tap into it.

Moser: Yeah. And you're going to see, like we saw with MercadoLibre, which is basically like in the Amazon of Latin America. MercadoLibre, the founders and leaders there had the wherewithal to really invest in this early on, which is why they've been so successful, and I think they're discovering the tailwinds of not only the growth in e-commerce but also in emerging middle class. I think that's something we should expect with India over the course of the next decade and beyond, is this emergence of a more powerful consumer, as time goes on, with such a massive population there. The financial implications could be huge. I don't think it's winner-take-all thing. I think Amazon is probably going to succeed, because they tend to succeed in whatever they do. And I think Flipkart is wise to be making as big and bold a bet as they are right now in that market. They seem like they're long-term thinkers like Jeff Bezos is, which is why I'm sure they're not looking at this as, No. 1, they're not looking at this as a winner-take-all scenario, and No. 2, I'm sure they're looking at this and thinking, "How do we build this business to succeed over the course of the next decade and beyond?" Because that's really what this is all about -- consumer behavior over the course of the next 50 years. I think e-commerce is proving itself to be where it's at.

Hill: Two more interesting notes that we got from our listeners that I think probably point to areas that these two companies are working on. One was that Flipkart is better at apparel. We know, even here in the U.S., Amazon is trying to do more with apparel. So, that's clearly something they're going to be working on. Amazon in India appears to be doing better with third-party sellers. If you think about the vast network of third-party sellers that they have on the platform here in North America, that's already paving the way for some success in India, as well. So, presumably, Flipkart is working on that as well, trying to get better at third-party sellers.

Moser: Absolutely. That is a great opportunity that exists. You have to look at these businesses beyond just the consumers like us. These are great platforms for other sellers to be able to, basically, take their small businesses and focus on growing the business without having to worry about investing in all of that infrastructure and inventory management, internet platform, mobile, whatever it may be. Amazon has proven to be an excellent third-party provider. So, that's certainly a big opportunity as well.