Sunday, January 8, 2012

Are ecommerce companies in India really sustainable?

We all know that ecommerce in India is growing at a rapid pace (around 40-50% a year) and presently valued at $10 billion. So everything seems to be on a very positive side as far as ecommerce is concerned in India. As a result, hundreds of new players are entering into this market every year. Some estimates claim that there are around more than 3,000 ecommerce companies in India.

So, how these companies manage themselves to differentiate their products and services from competition? There are many things that are common among all the ecommerce companies. viz cash on delivery, free shipping, security, new payment options like cash cards, EMI plans linked with credit cards, etc. But when it comes to differentiating factors there are very few things and that are captured only by very few companies. For example, some companies provide a great user experience and simple buying process. Another differentiating factor could be 'product offerings' i.e offering niche segment of products like kidswear, diamonds and other luxury items, etc.

So what's making these companies to mushroom in number? Well, everybody is competing for a share pie in this one of the fastest growing markets in the world. But all these companies tend to forget one main thing for any business to survival i.e profitability and scaling up (in terms of number of customers and revenues). There are few cases that has made many of these start-ups to revise their strategy. Recently, Taggle.com, an online electronics retailer, has announced to close its business due to increase in losses and the reason is it couldn't survive the intense 'price-war' that's going on among these so-called ecommerce companies.

So now the issue is about 'sustainability' in this space for the Indian ecommerce companies!

One good thing for customers though - great deals at an all time low prices!