Thursday, April 27, 2017

Will the bloodshed in the Indian e-commerce market end anytime soon ?

E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. These business transactions occur either as business-to-business, business-to-consumer, consumer-to-consumer or consumer-to-business. -, 2016.
Even though trading over the Internet is almost thirty years old, its popularity over the past ten years has been great and has seen many players enter this ludicrous market and disappear overnight. It has not been a bed of roses all the way.

Losses of E-commerce cos, INR crores  
                    2014-15             2015-16
Flipkart             2979                  5223
Amazon           1724                   3571
Snapdeal         1328                   2960

   Total             6031                  11,754, (Source Economic Times, January 20, 2017)

Why are Indian e-commerce cos bleeding heavily ? While all are upbeat about our great e-commerce companies, it is but a fact that all of them are bleeding heavily. While all the top three in 2014-15 made losses of approximately INR 6300 crores, 2015-16 saw them making still greater losses. In total about INR 11,600 crores among themselves.

Click here for my presentation in the class analysing the reasons behind it..

Major and minor Indian e-commerce players, at least 14 and many more ..
Even though we are upbeat about e-commerce companies in general, the real picture is very grim. How long can the top three e-commerce companies in India show a bold face and live with these losses. Amazon India may be able to survive for another three or four years of heavy losses, because of its rich US cousin, focusing on just consolidation in the Indian markets. 

It was a good discussion in the class today. One of the suggestion was to  stop the pretensions and get to play the game on the right basics without any pretensions. Customer acquisition and customer retention are two very tricky aspects in e-commerce where we find price-sensitive Indian streetsmart customers switching between e-commerce players at the drop of a hat.

The more competitive the ecosystem, the more casualties we can expect. Since it is accepted that Indian e-commerce market is the most populated with maximum number of entities vying for a piece of the pie, it will only do good for the industry in the long run. Just like the telecom market in the country presently being the most competitive in the world where the global majors like China mobile or Vodafone dare not enter and commit harakiri, the e-commerce market can also be expected to be the most competitive.

Since Alibaba, the $480 billion retailer from China and Amazon, $250 billion retailer giant from US are here to stay, e-commerce as a field is to stay, but needs a real cleanup and it will happen pretty soon. The companies cannot afford to bleed for long ! The Indian scene is pretty bad and at the same time we believe it holds the maximum promise in the long run.

Alibaba and Amazon, please stand by ! The bloodshed in the Indian market is on and shortly one can expect peace to return .. If  one succeeds in the Indian market, he/she can succeed anywhere in the world.


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