E-commerce companies will never turn profitable: Kishore Biyani

Kishore Biyani

Kishore Biyani-led Future Group is preparing to launch a new digital strategy – Retail 3.0 which will be a fusion of retail and technology. The new digital format will be called Tathastu and will facilitate everything at consumers doorstep. It will be launched on 21st November 2017.

“We are going to launch Retail 3.0. It’s called Tathastu – you ask and you get it,” said Biyani to ET. While Biyani didn’t disclose more details about Tathastu, he emphasized that artificial intelligence will be one of the key focus areas for the group.

Lashing out on e-commerce companies, Biyani said that in India hardly contribute to less than 0.2 per cent of total retail sales and will never be able to turn profitable. According to him, e-commerce companies aren’t Future Group’s competitors.

“Cost of doing business in a technology-driven model is very expensive,” he said, adding that the payment charges in India are much higher than that in China.

After establishing themselves in metros, e-commerce companies are looking to tap into rural areas. However, Biyani said that there is no point in going deep in rural areas as the consumer spend is very low. “There is no point going to the bottom of the pyramid,” he added.

The group is also eyeing to partner with technology companies to foster Tathastu. In future, it will also leverage technology to bring in personalization for the customer. “Technology is not our core area so we will look to partner with technology companies to enable retail 3.0,” said Biyani.

After acquiring phone commerce company Chaupatibazaar in 2010, the group acquired Rocket Internet-backed Fab Furnish in a stress sale last year. However, the acquisition didn’t work for the group as it had to shut the online furnishing portal.

Expressing his scepticism about e-commerce space, Biyani earlier said that he will not invest in the online space for two years.

For strengthening its offline part, Flipkart has been negotiating an 8-10 per cent stake in Future Lifestyle Fashions Ltd (FLF), the listed fashion arm of the Future Group. Flipkart’s arch-rival Amazon had picked up a 5 per cent stake in Shoppers Stop in September this year.

Comments

2 COMMENTS

  1. Notwithstanding the high frictional costs of ecommerce (shipping, returns, CAC, transaction fees, etc.) I still believe that given the massive population base of those with sufficient discretionary income in Tier 1 cities is enough to continue to drive growth for those business who scale prudently and keep costs under control. I believe strongly enough in the industry and the country that we are betting our own money on it as VCs, angels, and entrepreneurs.

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  2. i also feel so.in rural areas per capita income in low. they dont have purchasing power .even internet in going down the pyramid but logistic cost income of family is main obstacle in future growth of online companies.

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