Last week I attend a Webinar on eCommerce. That was a great discussion on how Indian eCommerce companies must find out new innovation to compete with international competitors. The business analyst gurus are predicting that it would be very tough for Indian eCommerce companies to compete with international companies like Amazon and eBay.
Whats The Issue:
As compared to Amazon and Ebay, it would be a very tough job for Indian eCommerce players to be in the market and keep working on same old school business model. Reason being Amazon & Ebay is not operating business on any funding nor they are relying only on eCommerce market to generate revenues. They are self-made millionaires and top of that they generate revenues from their byproducts. Amazon sell Servers while Ebay has Magento CMS. So there is no pressure of returning funding. However, Indian eCommerce are relying on VC & Angel investment. And this putting them in hurdle.
In business there is no friendship!! Investors are not anybody’s buddy. They simply say “I am putting my money so in three years I need 3X out of it”. Now to pay their funds Indian eCommerce companies work on every possible structure to generate revenues. Incase not they touch base of another investor to pay the amount of old investor.
Clear the Air:
To make it clear, suppose “A” is an eCommerce company and approach “B” which is an investment firm. “A” reach to “B” for funding. After analyzing the whole business plan “B” agreed for investment but only when “A” pays 2X more after 3 years. When 2 years passed and “A” found that they don’t have enough funds to pay off “B”, they pitched another investor firm “C” for investment. Again “C” ready to invest but at a condition to get 3X after 4 Years. From “C” Investment “A” pays to “B” and move on to their next year marketing plan. Finally, when “A” comes to know that this model is not going to help them anymore, they simply sell (with a small % of revenue sharing) firm to “D” who pays off all the debts. By this they are able to maintain the position in the market.
Business analysts are welcome to share thoughts on how Indian eCommerce companies can beat international players.