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India’s e-commerce players would witness very tough competition in the next 1-2 years, and a section of them, including biggies, may shut shop unless they create a sustainable business model, says tech investor TV Mohandas Pai.
“E-tailers are now realising that they can’t go on using capital to subsidise consumers to give deep discounts and grow the top-line, because the moment they withdraw the discounts, the top-line falls.
“So they have to create a sustainable model where the top-line keeps growing by providing better goods and better efficiency at decent prices,” the former Chief Financial Officer, HR Head and Board member of Infosys told PTI here.
“In the next 1-2 years, there will be very tough competition for e-tailers. We may see some people failing. Even big guys could fail, yes. It depends on who is willing to fund them to lose more money. They (e-tailers) have to cut costs, make themselves efficient and make their money go a longer way, and create sustainable models.”
End of euphoria
On the start-up scenario in the country, he said getting money has become tougher for start-ups after the euphoria of last year.
“So, the investors are telling start-ups to become viable, to demonstrate sustainability of the business model which is very good, because last year there was euphoria, people were pumping in money,” Pai, a prominent angel investor, said. “Even start-ups go through bursts of over-optimism and bursts of pessimism. These are very natural. Last year, valuations went ahead of value creation; this year venture capitalists are asking for value creation before they give valuation.”
On the prospects for start-ups over the next one year, he said good start-ups which have got a solid business and are working hard would succeed; start-ups that are just fluffy and throwing money would have a hard time.
“Start-ups need to become more efficient, increase customer delight, and create revenue and sustainable business models,” Pai, who is also the Chairman of Manipal Global Education Services, noted.
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