Talking profit: The missing brick in the e-commerce wall
E-comm cos talk the talk but are racking up losses. Will they ever turn profitable?
Thee-commerce industry is widely considered to be booming at the moment, however, the larger question emerging is whether e-commerce companies will ever record a profit. This was the question constantly posed to representatives of the top e-com companies at the Digital Summit, held at Indian Institute of Management, Bengaluru, on Saturday. With Flipkart heading into its seventh loss-making year and the fact that the big daddy of them all, Amazon, took approximately 21 years to make a profit , the question is a potent one.
Piyush Kumar Chowhan, director strategy, analytics, and process engineering, WallmartLabs, said, “There is cloud technology being deployed, there are data analytics being done and technology being used. There are new apps and better websites. But where is the profit?” Chowhan added, “Amazon took more than 21 years to record profits. In fact, it recently announced that it would start physical stores in Seattle. If e-commerce is the way forward, then why a physical store?” Chowhan feels that once a valuation of e-commerce businesses takes place they will all disappear.
Chowhan believes the key component in retail is a personalised customer experience. “A physical retail store still masters that process where personal attention is given to the customer There are personalised offers, which e-commerce giants have not been able to do yet,” he says. Though Chauhan was the lone representative of the brick-and-mortar model on the panel that was discussing the e-commerce business, a similar sentiment resonated through the room.
Ramesh Venkateswaran, professor, IIM-Bangalore, and the moderator of the discussion asked, “Is there a business model in place that will bring profit? Sales are the most important thing for any retail industry and how long with a model survive without concentrating on sales?” E-commerce giants, Snapdeal and Flipkart, who also had representatives on the panel, acknowledged the fact that the business is currently not profit-making. However, they believe this is a first step.
Saurabh Chandra, head of apps, Flipkart and Myntra said, “Yes, we are not making profits currently. We are in our seventh straight loss-making year. However, it is the beginning of an evolution and we’re planning a 1,000 years ahead. A profit-building model will emerge as people shift completely.” Even Sanpdeal had similar views on the issue: Ranjan Kant, director strategy, said, “Currently e-commerce penetration across the world is very low. In fact, the highest in the world is South Korea at just 14 per cent. So it is early and we have a long way to go. Once we have an omni-channel model which combines brick-and-mortar and e-commerce then the profits will come in.”
The
Piyush Kumar Chowhan, director strategy, analytics, and process engineering, WallmartLabs, said, “There is cloud technology being deployed, there are data analytics being done and technology being used. There are new apps and better websites. But where is the profit?” Chowhan added, “Amazon took more than 21 years to record profits. In fact, it recently announced that it would start physical stores in Seattle. If e-commerce is the way forward, then why a physical store?” Chowhan feels that once a valuation of e-commerce businesses takes place they will all disappear.
Chowhan believes the key component in retail is a personalised customer experience. “A physical retail store still masters that process where personal attention is given to the customer There are personalised offers, which e-commerce giants have not been able to do yet,” he says. Though Chauhan was the lone representative of the brick-and-mortar model on the panel that was discussing the e-commerce business, a similar sentiment resonated through the room.
Ramesh Venkateswaran, professor, IIM-Bangalore, and the moderator of the discussion asked, “Is there a business model in place that will bring profit? Sales are the most important thing for any retail industry and how long with a model survive without concentrating on sales?” E-commerce giants, Snapdeal and Flipkart, who also had representatives on the panel, acknowledged the fact that the business is currently not profit-making. However, they believe this is a first step.
Saurabh Chandra, head of apps, Flipkart and Myntra said, “Yes, we are not making profits currently. We are in our seventh straight loss-making year. However, it is the beginning of an evolution and we’re planning a 1,000 years ahead. A profit-building model will emerge as people shift completely.” Even Sanpdeal had similar views on the issue: Ranjan Kant, director strategy, said, “Currently e-commerce penetration across the world is very low. In fact, the highest in the world is South Korea at just 14 per cent. So it is early and we have a long way to go. Once we have an omni-channel model which combines brick-and-mortar and e-commerce then the profits will come in.”
