Future Group CEO Kishore Biyani questions logic behind investors' e-commerce funding
Organised retail entrepreneur Kishore Biyani has questioned the rationale behind investors committing billions of dollars to India's e-commerce sector in the recent past. The Future Group chief also expressed concern that online retailers, flush with cash, may eventually look at buying into traditional brick and mortar companies.
"These days, the media only looks at e-commerce. However, you must also ask if gross margins of any such company are positive or not. There is hope of survival for them when their gross margins are positive. I'm not saying it is sustainable or it is not sustainable. They're getting private equity money in the hope that one day they'll have their own products and brands," Biyani said.
At present, most e-tailers act as market places, selling other companies' brands and through exclusive tie-ups in certain categories.
The comments from Biyani, who is credited with making the organised retail sector a force to reckon with over the last 15 years, come within three months of online retailer Flipkart raising $1 billion in a new round of funding at an enterprise valuation of a staggering $7 billion.
The Flipkart announcement was followed up with American e-tailer Amazon's statement of committing $2 billion as investments in the country.