E-Commerce

From the Stone Age to urbanization, human race has developed to a great extent. Gone are the days when pigeons carried messages. Technology has paved its way from anything to everything. From households to the corporate world, technology is a part of our system.  The marketplace itself has seen a lot of ways in which it works.

It all started with the traders travelling to sell their products. With the ideology of nomads fading away, the organized brick and mortar stores came into being. With further development, malls and shopping complexes entered the picture. Today, with the advancement in technology, the upsurge of e-stores is evident. An e-store is a marketplace which provides us with the leisure of choosing a service or a good over the internet.

Everyone is fascinated by the discounts that are offered by e-stores. But one question still remains unanswered - “How are the e-stores going to make profit?”  How are they going to cover for the losses they may be incurring now? Those who have a broader idea about the startup industry may be curious about the reason of such high valuation of these stores. For example Flipkart was valued at $15 billion, Snapdeal at $4.7 billion. Such high figures surprised everyone since for the financial year 2013-14; the reported loss of Flipkart was Rs. 400 crore and for Snapdeal it was Rs. 270 crores.

In May 2014 Flipkart acquired Myntra for nearly $300 million. Myntra is an Indian e-commerce company which particularly focuses on fashion and casual lifestyle products. From the month of May 2015, Myntra came to be only application based. This change was not welcomed by its customers. According to some experts, the reason for this shift was to improve personal experience and cut down the extra costs. With a growing number of smartphones and mobile Internet users, it is possible that other websites will also start focusing on an app-only approach; dropping not just the mobile Web, but desktop usage as well, and streamline their expenditure on technology. Myntra claims that around 85 % of all users come to the site via the app, and that around 63 % of all purchases happen on the app. Therefore, the company believes, maintaining both a desktop and an app presence was not warranted*. In fact Myntra's sales dropped by nearly 10% after switching to app-only. However, these statistics came to rest after Sachin Bansal's statement –“You can’t be competition driven. This is more about how deeply we understand our users and the numbers show that mobile app only is the way to go.”

In April 2015, Snapdeal acquired FreeCharge for an expected value of $400 million. FreeCharge is another e-commerce company which provides online facility to recharge mobiles, Data cards, and postpaid mobiles. This acquisition is expected to, (i) strengthen Snapdeal to a whole new domain by boosting its market presence and (ii) make it more convenient for the users, through swift transactions. Kunal Bahl, Co-Founder & CEO of Snapdeal said “With this game-changing partnership with Freecharge, we have significantly enhanced our user base and now offer all our customers access to the widest selection of products and services online.”

Ravi Gururaj, chairman of the Nasscom Product Council, said smartphones are omnipresent in the consumer's palms and allow a vastly superior, more secure and highly personalized user experience when incorporating elements like seamless user authentication (via one-time password, biometric scanners), rapid payments via digital wallets, presence (via GPS, NFC and beacon sensors), real-time push notifications, and the ability to invoke cameras for discovery interactions.**

Currently, the large chunk of market is unorganized. The increase in technology savvy population and the advantage provided to us by e-stores, indicate that the e-commerce industry is the future.

-Ronak Sisodia