Technoglitch
Core Member
The lack of concern about the absence of profits in e-commerce is alarming.
From the market leaders such as Flipkart and Snapdeal to the hot new start-ups including Grofers (Locodel Solutions Pvt. Ltd) and PepperTap (Nuvo Logistics Pvt. Ltd), these companies and their investors have talked up the vast market size and the explosive growth in the number of Internet users.
Some analysts, such as financial services firm UBS, have said e-commerce sales can touch $60 billion by 2020 from less than $6 billion last year, driven by the manifold growth in smartphone users to more than 500 million
Marketing expenses and deep discounts are also unlikely to abate meaningfully until consolidation brings moderation in spending.
This level of uncertainty about business models of start-ups across the spectrum is worrying and finally prompting investors to step back. The funding rush into Indian start-ups is showing signs of ebbing as profits and viable business models elude e-commerce companies, Mintreported on 24 August .
Unit economics is an e-commerce jargon for making money from every user or on every order. No e-commerce company today does that—not nearly.
For the fiscal year ended March, losses at e-commerce companies are expected to soar from the few thousands of crore of rupees reported in the year before. In all likelihood, losses for the ongoing year will also increase significantly.
All these companies are private, so their results can only be obtained once they make regulatory filings later this year. Some others such as Flipkart are listed in Singapore and have a byzantine structure which makes it even tougher to get reliable financial reports.
E-commerce hype masks heavy losses - Livemint
From the market leaders such as Flipkart and Snapdeal to the hot new start-ups including Grofers (Locodel Solutions Pvt. Ltd) and PepperTap (Nuvo Logistics Pvt. Ltd), these companies and their investors have talked up the vast market size and the explosive growth in the number of Internet users.
Some analysts, such as financial services firm UBS, have said e-commerce sales can touch $60 billion by 2020 from less than $6 billion last year, driven by the manifold growth in smartphone users to more than 500 million
Marketing expenses and deep discounts are also unlikely to abate meaningfully until consolidation brings moderation in spending.
This level of uncertainty about business models of start-ups across the spectrum is worrying and finally prompting investors to step back. The funding rush into Indian start-ups is showing signs of ebbing as profits and viable business models elude e-commerce companies, Mintreported on 24 August .
Unit economics is an e-commerce jargon for making money from every user or on every order. No e-commerce company today does that—not nearly.
For the fiscal year ended March, losses at e-commerce companies are expected to soar from the few thousands of crore of rupees reported in the year before. In all likelihood, losses for the ongoing year will also increase significantly.
All these companies are private, so their results can only be obtained once they make regulatory filings later this year. Some others such as Flipkart are listed in Singapore and have a byzantine structure which makes it even tougher to get reliable financial reports.
E-commerce hype masks heavy losses - Livemint
