Tuesday, June 12, 2012

E-Commerce in India - Not a bed of roses

Pluggd.in has a blog post penned by Maniraj Singh, graduate from IIT Delhi and MIT, USA and entrepreneur himself. The blog post titled "Why you should stay away from e-commerce in India [A Perspective]" has some insightful pointers on what lies beneath the "rosy picture" that is often, albeit wrongly, associated with e-commerce in India.

The post examines 7 facets of an online commerce portal and how razor thin a line these ventures tread in each of these. Key points that emerge from the detailed blog post

  1. Doing business online is more capital intensive than in brick and mortar variants due to lack of order predictability and the artificial pressure from customers to brandish a greater variety of offerings.
  2. Lack of physical presence results in customers putting pressure on the e-commerce portals to pass on the cost benefits to them
  3. Cash on Delivery is one of the least profitable ways to sell online due to the charges levied by 3rd party logistics providers who charge the vendor for collecting cash from customers. They also have a say in the speed with which they reconcile cash with the online seller. The online seller will also have to bear double the cost in case the customer rejects the item.
  4. Competition is so bad and the market space so cluttered that absolutely nobody is making any profits. Everybody is burning money (Self or investors money) in trying to attract customers and promote mind recall and playing the waiting game to see who drops off the race.
  5. The only way out of the race is either to get acquired or die a horrible death for now.... 


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