Amid the growing mirage of India’s economic ambitions, there appears to be a market that is lurking at the opportunity to rise. Any uncertain economic policies and an unstable environment do no deter this sector from a spectacular showbiz of exuberance and innovation. The E-commerce industry in India is whizzing through the valuation processes at ease with not so much of a careful risk management strategy.
As India draws the attention of various funds, foreign investors, asset managers and industry players, economists all over the country point to a very pertinent question—what is the future of E-commerce? Is India’s e-commerce bubble a viable shift from mainstream forms of trading or will the bubble deflate with sustainable counter-effect?
Where is the strategy?
For every time a business launches, a business model and a stringent governing strategy overtures it. There is no doubt, there is a remarkable market for growth, with around 250 million active Internet users, and India is considered to be one of the largest blocs in the world. A very powerful combination of demographics and technology— India’s 2/3rd of the population is under 35 years of age. They comprise of the largest share of Internet users. This amalgamation will lead to what is predicted to grow up to 10 times by 2020.
Several reports from industry experts however suggest that the e-commerce bubble in India is grossly misplaced. Most companies are simply bleeding money. The companies that are spurting like mushrooms in the monsoon are burning capital at the same speed at which they are raising it. Create positive revenue stream into the business is not the primary focus right now.
What’s the future?
E-commerce in India is in the very nascent stage of development. It is also indicative of the fact that companies are shifting primary focus from profits to growth at high speed. The growth supplemented by the availability of capital and aggressive discounting is leading up to many investors and traders to believe the E-commerce to be only a bubble.
Many want to wait till the market settles to a welcome consistent and non-volatile business environment. E-commerce companies should then be able to raise the money at almost flat valuation—implementing the fundamentals to catch-up with the inflated valuation.
Connectivity issues and more importantly, India’s regulatory environment leave the future of E-commerce is on the brink of uncertainty as foreign direct investment, tax administration remain under unclear policies, highlighting the constraints due to a hobble present in the market.
The availability of internet access, infrastructure for faster delivery and credit usage of the nation all contribute towards the arguments about the E-Commerce bubble. But the large majority of population is not using internet yet and that potential holds answer to this question. Future, but not so distant, will tell…