How Ongoing pain in E-Commerce Segment will Impact Many Device Manufacturers

Indian E-Commerce companies are going through the transformation phase as per my view. The investors pulled back with their wallet and now more demanding with these companies to be self reliant instead of relying on cash burn to gain userbase as well as market share.

We all know that around 60 to 70% of their GMV is coming from Electronics segment predominantly from Smartphone segment. The fall in funding and more pressure to make the organization EBITA positive, E-Commerce companies in India are cutting down commission to discount which is making them less attractive for consumer to sellers on the portal. We must note that many of the retailer took an advantage of E-commerce portal and used as a platform to sell their idle inventory without making any losses.

The change in E-Commerce companies dynamics will have direct impact on Smartphone companies relying heavily on E-Commerce companies for their sale while appointing 3rd party servicing outlets. On a contrary the established home grown Smartphone player's are going to regain the market share in the second half of FY17. The home grown Smartphone player posses strong retail presence as well as relationship and stood with the retailer when the onslaught was going on.

The loss of market share by E-commerce companies in total Smartphone sell through percentage will also impact E-Commerce companies valuation as their chunk of GMV comes from Electronics section.

How Indian Startup Turned Into Devil From Darling Within Two Quarter

It is really interesting and surprising to observe the dynamic change of business viability within the investment community towards Startup. It's long before when anyone and everyone want to be part of startup bandwagon with very strong collective voice that India is going to be the center of Innovation, E-Commerce and Service.

Even more shocking that many Ex-CEO of reputed organizations started their investment fund as well as turned into MENTOR role. The virtualized form of publicity funded by big fund players even prompted Indian government to offer multiple incentives to Startup community to ensure that "New era of Employment" culture happens in India.

I, in my personal opinion always stood the other side of the table and kept raising my voice about non viable business case across sectors and many kept on giving me the news about fat E-commerce organization funding news.

One marked down of Flipkart valuation by leading investment firm, turned the perception of investment community about the profitability to sustainability of business

Isn't it laughable; how investment guru's can go wrong in their business model within weeks? That's reminds me of Mr. Rakesh Jhunjhunwala statement about business model sustainability of Indian E-Commerce Companies and that is the reason that he is one of the best in his investments.

It raises few question marks around the handling of business such as lavish office, parties, and promotions, pay package, paid PR.  The investment community kept on investing in those firms even after the gaps being clearly visible in the fear of losing side.

In my point of view, Successful investment assessment happens at Metro Station to Bus Stop to College Campus instead of Air conditioned business lounge of 5 Star Hotel's. Root level market intelligence is the foundation of business model which should be so flexible that it should be refined on the fly supported by the alternative revenue stream.

I really feel bad for the startup for being portrait as Devil from Darling within two quarter for others mistake.

I still believe that lots of good startup is still in the market place but they are not noticed because they don't believe in paying PR cost just to tell the world that they received $100k seed funding :).

It's the right time for the investor to jump in and pick the quality company to average out their losses.

Tata CLiQ e-commerce platform - Serious Competitor

For the last three year, India is the talking point everywhere around e-commerce boom with more than 70 million user uses e-commerce portal for one or another reason. The potential ofe-commerce is huge provided tackled properly in a strategic manner given the fact that mobility data user are growing. Till now only 23% of total data users are opting for e-Commerce sites; be it mobile or WEB and transaction rate is in low single digit until unless e-commerce portals are going for flash sales.

Interesting maximum revenue of established e-commerce companies revenue comes from electronics section and predominantly from mobile devices. Still e-commerce companies only sells around 15-17% of the total shipped Smartphone through their portal and rest falls in Local Retailer segment. After observing the trend of e-commerce companies performance as well as the threat points; at last Tata group announced their entry into the said segment.

We should remember that they have very strong experience through their retail business around fashion, electronics and other segment and many of the Tata Sons controlled companies offer many products such as capital goods and all. During phase 1 of retail business, they defined the process of procuring to warehousing to channel management to delivery management which is very crucial for any organization to be successful.

 Secondly, Tata sons also controlled one of the finest companies in the IT segment and can change the tide on the basis of innovative mechanism which no one can even think off. Given the above facts, CLiQ may immediately impose itself as non avoidable competitor in the market place using its unmatched brand value, great market reach, producer of many product.

They may opt to connect their retail outlets with CLiQ where user can place an order online whereas delivery or demo can be done through retail outlets.

Given the branding, most of the buyer and seller will be more than happy to get attached with them and on top of that, Tata may not opt to reverse strategy where they choose to acquire only profitable user base instead of user base to generate virtual valuation to get the funding.

In my opinion, the combination of CLiQ and Tata Group controlled retail outlet may pose very stiff competition to its competitor and believe that it will be learning for everyone. Its a move by Tata Sons which carry a capability to change the market dynamics

The Ongoing Indication from Indian e-Commerce - Consolidation is Inevitable

Most of the e-commerce companies are making round of news for all wrong reasons. The latest one is the delay in honoring their commitment to Campus selected student into professional world. The even interesting part of lack of communication from e-commerce companies with proper answer to such universities so that universities plan for the alternative for their budding high quality brains. It seems that e-commerce companies started a feel that by the end of 2015 that they are governing the economics of India and went from humble to arrogant mode.

In my point of view, recent regulation and missteps landed them in a soup

1. Regulation around Discounting
2. Stiff Discounting to acquire and retain userbase
3. Hiring Named and Famed professionals without any defined Roles
4. Very high attrition rate is very high as experienced resources donot need Brand but Brand needs them and hence many of them left abruptly and all project running under them went underwater
5. Left and right acquisition without clear vision on Integration and synergy
6. Product Quality sold on their portal
7.  All e-commerce companies fighting for the limited number of userbase and In India; e-Commerce centric userbase is not more than 140 Million
8. Problem around order something and receive something dented their image
9. Their main revenue stream relied on Electronics and that too Smartphones supported by heavy discounting by e-commerce sites
10. Lack of Innovation and Cross Collaboration
11. Lavish expenditure on Offices and resources. Recently many e-commerce companies announced that they are closing their office in tier 2 and Tier3 cities

It lands us to think that E-Commerce companies relies mainly on metros and sub-metros cities based userbase. Also concluded that retention of the userbase is very low and also the process of registration with their applications to portal is bit cumbersome as per the Indian user standard. The stiff competition and continuing discounting as well as in/out acquisition of companies coupled with many investment landed them in cash crunch.

When they thought of raising the fund and started preparing for the same; Analyst firm started marking down their valuation and put them in Cat and Mouse game.

In my point of view, 90% of the Indian e-Commerce companies will ultimately land into closure mode and rest of them will be forced to join hands to survive. They must also realize that most of the Indian State imposed taxes on their shipped products and in-turn the last mile benefit offered by e-commerce companies coming to an end and they must think of alternative revenue to be viable in the market place. We all should introspect that why our e-commerce companies are not making profits whereas the international e-commerce companies operating in other countries making profits. It's better to join hands and fight collectively instead of fighting internally.