THE NEXT FIVE YEARS FOR BUSINESS
(12) E-COMMERCE
Money Rich, Time Poor
E-commerce is an idea whose time has finally come in India
Entrepreneurs can start a software
company, build a cement plant or set up a restaurant but since such businesses
already exist, there is enough knowledge to learn from and avoid common
mistakes. Of course, they still need to deal with the turbulence of building a
new business from scratch as opposed to a cushy job. This requires courage.
Pioneers go a step further. In addition to courage, they need the ability to think with their hearts and not their minds. In 1999, when I co-founded India's first e-commerce company, there were less than three million people using the internet in India and we were starting off on a journey to change people's habits - always a difficult task. Simple back-of-the-envelope projections clearly suggested there was no business viability and we should not enter this space. That was our mind talking.
But we listened to our hearts and went ahead. Perhaps our business idea was several years ahead of its time in India but we were ready to grab a boat and sail into unchartered waters, go where no one has gone before. This is the key difference between entrepreneurs and pioneers. Entrepreneurs are courageous, pioneers can be foolhardy.
Today, when I see my pioneering efforts attracting entrepreneurs and investors scrambling to get a share of an exploding industry, I feel proud and satisfied. But I worry. The future for e-commerce in India looks great. Consumers are lapping up the benefits of humungous selection, great pricing and unmatched convenience are shopping online with a vengeance and this movement and growth is likely to continue unabated for many, many years. I worry because entrepreneurs, in their quest for pure top line growth have forgotten that businesses need to make profits to sustain and grow.
Investors have created a myth of unrestricted capital and entrepreneurs, riding on this myth have over invested and overspent in creating infrastructure and acquiring customers at high costs that will be hard to recover. In addition to this financial recklessness, it now appears that certain e-commerce companies may have allegedly gone foul of the prevailing FDI and FEMA laws to raise capital for the fledgling businesses.
I hope that the sudden dearth of easy capital will force entrepreneurs to re-engineer their businesses and focus for profitable growth. I hope that the authorities, after due investigation will reveal if any FDI laws were broken and establish severe penalties so that such corners are not cut in future and most importantly help the industry to attract international growth capital. This is very important because everything points to spectacular future growth of e-commerce in India.
Over the next five years, the internet population in India is expected to cross 300 million users, the second largest in the world after China and far ahead of even the USA. Over 75 million of these netizens are expected to shop online not just through computers but increasingly from their handhelds and tablets. Choked urban infrastructure and stressful corporate lives will add masses of the "moneyrich-time-poor" people who will move to online shopping in droves for most of their daily needs.
A whole new generation of young India is growing up comfortable and savvy with technology. They pay bills online, search for directions on their smartphone apps, believe ATMs are bank branches; for millions of these youngsters shopping online will become part of daily life. Large offline retail chains, struggling to make profits in their business will turn to e-commerce to access millions of new customers at low costs and improve returns from the existing supply chain infrastructure. This will trigger further awareness of online shopping.
On second thoughts, I am not just hopeful. I am truly excited about the future. Because e-commerce in India is now an idea whose time has finally come.
By K VAITHEESWARAN who co-founded Indian's first e-tailer Fabmall (now Indiaplaza) in 1998 CDET130104
Pioneers go a step further. In addition to courage, they need the ability to think with their hearts and not their minds. In 1999, when I co-founded India's first e-commerce company, there were less than three million people using the internet in India and we were starting off on a journey to change people's habits - always a difficult task. Simple back-of-the-envelope projections clearly suggested there was no business viability and we should not enter this space. That was our mind talking.
But we listened to our hearts and went ahead. Perhaps our business idea was several years ahead of its time in India but we were ready to grab a boat and sail into unchartered waters, go where no one has gone before. This is the key difference between entrepreneurs and pioneers. Entrepreneurs are courageous, pioneers can be foolhardy.
Today, when I see my pioneering efforts attracting entrepreneurs and investors scrambling to get a share of an exploding industry, I feel proud and satisfied. But I worry. The future for e-commerce in India looks great. Consumers are lapping up the benefits of humungous selection, great pricing and unmatched convenience are shopping online with a vengeance and this movement and growth is likely to continue unabated for many, many years. I worry because entrepreneurs, in their quest for pure top line growth have forgotten that businesses need to make profits to sustain and grow.
Investors have created a myth of unrestricted capital and entrepreneurs, riding on this myth have over invested and overspent in creating infrastructure and acquiring customers at high costs that will be hard to recover. In addition to this financial recklessness, it now appears that certain e-commerce companies may have allegedly gone foul of the prevailing FDI and FEMA laws to raise capital for the fledgling businesses.
I hope that the sudden dearth of easy capital will force entrepreneurs to re-engineer their businesses and focus for profitable growth. I hope that the authorities, after due investigation will reveal if any FDI laws were broken and establish severe penalties so that such corners are not cut in future and most importantly help the industry to attract international growth capital. This is very important because everything points to spectacular future growth of e-commerce in India.
Over the next five years, the internet population in India is expected to cross 300 million users, the second largest in the world after China and far ahead of even the USA. Over 75 million of these netizens are expected to shop online not just through computers but increasingly from their handhelds and tablets. Choked urban infrastructure and stressful corporate lives will add masses of the "moneyrich-time-poor" people who will move to online shopping in droves for most of their daily needs.
A whole new generation of young India is growing up comfortable and savvy with technology. They pay bills online, search for directions on their smartphone apps, believe ATMs are bank branches; for millions of these youngsters shopping online will become part of daily life. Large offline retail chains, struggling to make profits in their business will turn to e-commerce to access millions of new customers at low costs and improve returns from the existing supply chain infrastructure. This will trigger further awareness of online shopping.
On second thoughts, I am not just hopeful. I am truly excited about the future. Because e-commerce in India is now an idea whose time has finally come.
By K VAITHEESWARAN who co-founded Indian's first e-tailer Fabmall (now Indiaplaza) in 1998 CDET130104
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