Terming e-commerce in India as hard game to win, K Vaitheeswaran who founded Indiaplaza.com, thinks no current players in the segment will earn profit.
“No one will make a profit. You are hoping to be the last man standing. You can never be the last man standing since there is always a person with more money than you.
And 50% of all customers that shop online do it for discounts and delivery. So, it’s a hard game to win,” Vaitheeswaran said to ET in an interview when asked about
profitibility possibility of Indian e-commerce firms.
Indiaplaza after running for few good years had to shut down due to funding crunches as marketplaces like Snapdeal and Flipkart consolidated their places with huge funding influx. Vaitheeswaran also did not get the timely support of investor.
“We had a term sheet signed with an investor, and they kept saying they had wire transferred the money, but the money never reached us”, he added. He also thinks that
Indian e-commerce players should not try to outrun US e-tailer Amazon in technology. “It is tough to beat Amazon in technology,” he said.
In the fiscal year 2015-16, the Big Three- Flipkart, Amazon and Snapdeal, which all set to merge with Flipkart, of Indian e-commerce sector more than doubled. Snapdeal
posted a loss of Rs 2,960 crore, Flipkart’s Rs 5,223 crore and Amazon’s Rs 3,571 crore, summed upto a total loss of Rs 11,754 crore. In 2014-15, the combined loss
sheet of the three firms totaled Rs 6,031 crore (Amazon: Rs 1,724 crore, Flipkart: Rs 2,979 crore, Snapdeal: Rs 1,328 crore).
Vaitheeswaran has penned down his experience in a book titled ‘Failing to succeed’, in which he cautions the budding entrepreneurs about the dark side of start-up
ecosystem. He co-founded Fabmart.com in 1999. Within 3 years, he followed up with Fabmall, India’s first integrated online and offline retail company. Fabmall went on to become IndiaPlaza.com, which was subsequently acquired by the Aditya Birla Group and re-branded as More.
According to Forrester, Asia Pacific continues to be the largest region for online retail sales. Their data shows that with $681 billion in online retail sales in 2016, China is the largest market for e-commerce globally, followed by the US; but it is India that is the fastest-growing e-commerce market.
Indian market is expected to reach $64 billion by 2021.