Focusing on Profitable Growth in E-commerce

BENGALURU: Having witnessed the volatility in e-commerce market for close to four years, the investors have now shifted their focus on “profitable growth” to attain stability, according to a recent CII-Deloitte report. 

The report indicates that the B2C segment has broadened its horizon, which has led to creation of many ‘unicorns’. "However, focus of investors going forward seems to have shifted to profitable growth to achieve stabilization of the economic model," said the document titled 'e-Commerce in India - A Game Changer for the Economy', as published by the Business Insider.  

The emphasis on profitable growth is opening the doors for more collaborations and partnerships across the value chain, aiming for optimizing costs. The report has also forecasted the likelihood of rise in MSMEs and entrepreneurs from the remote places in India since the e-commerce B2B segment is showing signs of rapid digital adoption.

The e-commerce giants are going to cut down on their burn rates up to 50 percent to achieve profitability and early break-evens. "This aggressive drive comes at a point when capital is becoming scarce for top venture-backed online retail companies. There is also a reduction in dependence on discounts as a growth strategy," the report added.

By the end of 2020, the e-commerce industry is expected to corner a bigger slice of Indian internet market with a whopping approximate value of USD 100 billion.  

The report further attributes the growth of e-commerce to the increasing internet and smartphone penetration in metros as well as tier two and three cities. Over the next five years, the mobile devices are going to drive sales through online platforms.

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