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Even as the two online retail giants — Amazon and Flipkart — fight it out in the fast growing Indian e-commerce sector, a few speciality and offline retailers are turning their focus on profitability.
Rajiv Srivatsa, founder of online furniture retailer Urban Ladder, said that big investments have already created enough buzz for the e-commerce sector that smaller and speciality players will not require to invest much in marketing or advertising.
“The fight is not to eat into each other’s share but to grow the market. Rather they can focus on mobile apps, product innovation, supply chain, on-time delivery and profitability,” Srivatsa said, and added that the two-year-old e-tailer would turn profitable by the end of next year. Pepperfry, another speciality home and furnishing e-tailer, also thinks the focus has shifted to profitability and is consequently going slow in rolling out advertising campaigns.
While Amazon will invest $2 billion (₹12,000 crore) in its Indian arm Amazon.in, India’s poster boy Flipkart.com has received over $1.8 billion (₹10,800 crore) from private equity investors in the last seven years.
Industry experts think this competition will lead to more players, including offline retailers, entering this rapidly increasing market. A recent Crisil study expects the Indian online retail market to touch ₹50,000 crore by 2016 from the current ₹19,000 crore.
Opportune timeArvind Singhal, Chairman of retail consultancy firm Technopak Advisory, said this is the right time for large corporate houses such as Reliance, Tata Group, Future Retail and Aditya Birla Retail to enter without investing much. According to reports, big players such as Reliance and Walmart are planning e-forays and betting big on the Indian online market.
“Other players need to start differentiating themselves and take advantage of the buzz,” said Ahmed Aftab Naqvi, Founder and CEO of online digital marketing firm Gozoop.com.
Meanwhile, Rehan Yar Khan, founder, Orios Venture Partners, said that none of the large players is focusing on profitability at the moment.
Citing the Facebook example, Khan said, “Mark Zuckerberg did not switch on the revenue tap for 6-7 years. The idea was to wipe out competition and it did. Same will happen in the e-commerce sector.”
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