Expressing his skepticism about e-commerce space, Future Group Chief Executive Officer Kishore Biyani said that he will not invest in the online space for two years.
“It’s stupid to be in the online space. In lifestyle, the e-commerce industry revenue in India will be around Rs 2,500 crore, and losses too will be of equivalent amount. Mobile and electronics, too, do not make money online. Having burnt our fingers, we have decided to take a break of at least two years before even thinking anything remotely about online,” said Biyani to ET.
The group has lost Rs 300 crore reportedly on web ventures. In its first venture a decade ago, it has sunk around Rs 250 crore on FutureBazaar.com. In April 2016, Biyani had bought online furniture seller FabFurnish.com, but later after suffering loss it was shut down.
Biyani, who considers himself a very good student of e-commerce, does not want to lose money anymore. Biyani is considered the pioneer figure in the retail business. He had been through some bad times during his early stint.
In 2012, when his firm was not doing well, he had to sell his Pantaloons retail chain business to the Aditya Birla Group (AGB) company Aditya Birla Nuvo Ltd (ABNL) to cut debt and survive.
Having burnt his finger, Biyani finds that the existing e-commerce marketplace model is not sustainable but thinks that will change with implementation of the new government policy, which was announced in March last year.
Of late online retailers, who gained upper hand over retail stores through huge discounts, are shifting their focus to growth profitability from GMV to keep investors intact due changing metrics. This is resulting in drop in discounts, which is good news for physical retailers that will allow them to gain some lost ground again.
This was evident in Sanpdeal case, where Founders admitted of committing strategical mistakes. In 2016, the company losses touched Rs 3000 cr, from Rs 1,320 cr in 2015. Now the company is all set to be acquired by Flipkart, which too had losses to around Rs 2,300 cr in 2015-16.
According to UBS AG report, Online retail in India is expected to increase to $48-60 billion by 2020 from $4.47 billion in 2014.
Central revenue to go up
The Future Group’s lifestyle and fashion retail outlet Central is aiming at a 40 per cent business growth this year to take its revenue to Rs 3,500 crore. Central will be investing Rs 300 crore for expanding its reach across cities, said Biyani.
The group’s fashion business will be close to Rs 12,000 crore in 2017. The group has planned to open 15 stores in this fiscal year, which will take the numbers of total stores to 50 by the end of this year.
Currently, there are 35 stores in different cities across India.
Future Group also plans to foray into the international market for fashion and consumer products through a joint venture with Oman-based Khimji Ramdas (KR) Group. The group plan to open the first fbb store early next year in Oman.
