Could it be true? The ecommerce industry is now in trouble! Does this mean we have to revert to conventional trade? But what kind of trouble are we talking about?
Well for starters ecommerce funding is scarcer than ever. Many online marketplaces have been devalued and marked down. Those who once reigned supreme are now questioning their business approach and remodeling their business strategies.
According to a research report by Kotak Institutional Equities, with limited availability of funds, the ecommerce ecosystem in our country has begun adopting much stricter norms for business models. All while focusing on business profitability and consolidations.
The report also said, “We believe this (e-commerce) shake-up may intensify further, leading to the emergence of one or two strong companies within each sub-sector.”
Reduced funding for Online Marketplaces
In March, Flipkart and Snapdeal both experienced devaluation. Investors Morgan Stanley brought down Flipkart’s $15 billion denomination by an alarming 27%, which is $4 billion. By May the marketplace was marked down yet again by two more investors.
Investors pulled their stakes out of Snapdeal too. Rocket Internet’s Global Fashion Group (GFG) was devalued by 67%, while Jabong continues to hold on despite no love in the form of finances from parent company, Rocket Internet. eBay and Quicker are also among those who lost investors.
Troubled Hyper-local Category
The hyper local category is the worst hit in Indian ecommerce. Online grocers and their delivery partners were doing swell last year. But now everyone is betting against them. Many participants in the hyper local segment have either shut down their businesses or brought down the scale of their operations.
Flipkart ended all operations related to Nearby its grocery delivery app. Ola shut down its hyper-local delivery project. PepperTap could no longer take the pressure and decided to change its focus to pure logistics like its parent company. And Roadrunnr, a delivery company merged with Tinyowl, the food ordering app which has recently shut down operations everywhere except Mumbai.
Government Regulations
Government regulations haven’t made things any easier for online sellers. With the introduction of the new FDI ruling, online marketplaces have experienced endless trials. The restrictions regarding dependence on single large sellers and discount offers require etailers to restructure their business models. According to the report, this will necessitate major changes in strategy and it will impact the growth of marketplace sales.
Offline Retailers Taking Advantage of Ecommerce Distress
The current rate of consolidation among ecommerce players may intensify, resulting in the existence of only a few strong players within each category.
On the other hand offline retailers may take advantage of the situation by taking over their ecommerce rivals. Like Titan’s purchase of Caratlane and Future Retail’s acquisition of FabFurnish.
The ecommerce scene is one of pure uncertainty and everyone is questioning their association with it! Where will your online retail business stand in a few days?
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