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The Great Indian E-Commerce Market: Boom Or Bubble?

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Mayur Pathak
Mayur Pathak
Founder , 
dealaram.com


But there have also been companies who were in the business, got funded and could not do it. One of the websites who recently shut its shop wrote on that they were ceasing their operations because they didn't want to burn the investors' money. The market sentiment is similar to what the company said. While many feel convenience in shopping online will continue to fuel growth, there is always an incumbent unanswered question. How do I differentiate?

Since most players are luring same set of customers, selling the same product, the way they have managed their advertising and social media has played a very important role in the growth for supremacy. "Social Media plays very important role for any brand online," says Harsh Gadia, founder of a social media and digital advertising agency, Smursh. He adds, "You have many players competing around the same product at almost same price for the same customer. So it is very important to have a brand positioning which helps in giving the brand a personality needed to outdo its competitor. Flipkart, for example has earned a reputation of someone who under promises and over delivers."

Valuations are high in the e-commerce market. With nearly billion dollars already spent in funding in less than a year, a lot is at stake for the online retailers. However if the business models and target markets are to remain stagnant for the next few years, there will be tremendous pressure on e-commerce companies to claim a greater share of the relatively 'small' online buyer segment in comparison to the large Indian middle class, who still opts for a Big Bazaar over a Flipkart.

The internet penetration is also taking its own time. With operations still not streamlined and investors running out of patience, the ecommerce industry is bound to see consolidation and correction in the valuation. "I think the corrections in valuations, what you have called bursting of bubble, is already happening. But online retail is the future of retailing in India, more so than even the developed countries," says Alok Mittal. As Investors, Entrepreneurs, Consumers… we all want to believe it. We just need more reasons.

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Reader's comments(3)
1: Thanks for the interview- I'll add that "expectations of future earnings" is the logic that often goes untested. The corrections we are seeing lately are due to investors realizing how they were wrong about the fundamental business logic- generally to do with their cost of acquiring customers and repeat behavior.

- Amit, founder-CEO, GoUntucked.com
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