“Flat 40% off 6-10 pm. Offer valid only for today!”
And this “valid only for today” offer stands true for thrice a week. At least. How many times within the last month itself have you received such a message from a much celebrated etailer of our country? I believe, if you count all the emails as well, the answer would go up to a double digit. Well, if I told you my own story, then I get an email or an sms from this online retailer almost every day. But then, you cannot just blame these guys for trying overtly hard, for their peers are also sailing in the same dingy boat.
India is a land of 1.3 billion people. Most firms die while trying to find a footing for themselves. But whichever does actually manage to start getting identified by the masses, there is little much it has to do for itself thence; it has hit the bull’s eye. The pie is so huge here that everybody in business today wants to have a chunk of it. This is the cause behind your and my getting a message from the same etailer, almost every day, notifying us of an “exclusive short-term” sale. For starters, they just want a taste of the delicious pie.
Flipkart might have revolutionized the way Indians shop online, but believe it or not, it is not making any profits at all. In fact, their losses are burgeoning with each passing year. The logical question to be asked right now would be: Why does Flipkart continue to operate then? Well, lets’ understand the whole ballgame of the etailer market first.
Although it might seem ludicrous, but an etailer market works on the basis of ‘winner-takes-all’ strategy. The plethora of online retailers in the global market right now are in an ‘investment mode’ rather than an immediate profit making business. In what has seemed to be a losing battle since eternity, Amazon, world’s biggest online retailer is yet to post overall profits in its balance sheets, even though it has been in the business for almost 2 decades now. Flipkart has emulated the same Amazonian model. Last year, it reported a loss of Rs. 281.7 crore.
So, the rudimentary 3 step fundamental of an etailer is:
1. Endure the resistance of other fish in the sea.
2. Eat them up as they gradually lose strength due to lack of food (sales).
3. Enjoy monopoly and make profits.
The flow of steps above seems a lot easier on paper, but not even the biggest fish in the sea (read: Amazon) has ever been able to enjoy monopoly all its life.
India might seem to be the grandest feast to all the etailer fish in the sea currently, but it just might prove to be the biggest bait instead. For it literally comes with a lot of catches and idiosyncrasies of its own.
The gravest issue is that there is too much competition for comfort. If, for example, a Flipkart is actually waiting to eat up all the fish in India, the problem is that a lot of small fish continue to grow in the swamps every passing day. So, the death rate is actually lesser than the birth rate. Even if the biggest fish waits for everybody to die down, the time lapse could be too much as a result. The fish just might get old and irrelevant. This is obviously a hypothetical scenario.
Another issue in India is that the distribution channel is heavily muddled with clogs. Even if the business is good and there is a colossal number of online orders pouring in everyday, the company finds it extremely tough to actually deliver the products to their new rightful owners within the promised time. We have our narrowest labyrinthine alleys and unreliable public transport to thank for this.
Finally, the prime issue with etailing in our country lies in its psyche. We are a group of people who are still skeptical about buying products online. Especially the electronic goods. We are infamous for asking for banging on the car, smelling the vegetable, touching and “feeling” the fabric of the saree before buying them. Hence, unless and until the psyche of an Indian man is changed, the concrete outlets will continue to eat into the virtual business in India
But, having said that all, India is still a platter that is too large and delicious to resist. In a land which boasts of almost 150 million Internet users even though the penetration is a meager 11%, the potential is commodious. According to the KPMG Internet World Statistics report of 2013, the number of online buyers in India was 25 million, and is growing exponentially at a rate unparalleled by any other country. So, in the long run, it actually makes sense for the biggest fish to wait by the corner until it finishes up its preys and then rules the sea. What that means is, we just might have to bear with the “Flat 40% off sale, just for today!” messages for a long time to come.