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March - 2013 - issue > View Point

Running An E-commerce Marathon

Manoj Gupta
Wednesday, February 27, 2013
Manoj Gupta
Headquartered in Mumbai, Craftsvilla, is an online provider of handmade Indian designer & gift items.The company recently raised $1.5 million in series A funding from Lightspeed Venture Partners and Nexus Venture Partners.

E-commerce is an interesting "business concept" which unfortunately is very difficult to translate into a "business model" which is viable, profitable and is non-VC dependent. In India lot of ecommerce entrepreneurs and venture capitalist too fail to understand that E-commerce is a "business" where you have to make money like a "Lala" not a video game where more the points you get (number of orders), more the kick you get.

The exponential myth of E-commerce is that E-commerce is scalable like hell in a short amount of time, which off course it is if you sell products below cost. The realistic fact is that it is very scalable but as every business, it requires an "inception period" where basic fundamentals of business need to be understood and followed. This includes finding and communicating the right "positioning" in the market, understanding the customer segment and need, understanding your product-market fit and understanding the economics of the business (how to make the business cash flow positive).
The fact of the matter is that lot of E-commerce companies in India do not know what they are or what they want to become. They all want to become Amazon of India. They start with one category, throw around deals, get to a certain number of orders, add another category, throw more deals around and the video game keeps continuing. Apart from lack of clarity on "positioning", they also are not making efforts to understand how to get the right set of customers to their webstore, convert them through right product-market fit and bring them back through amazing customer service.

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