India’s e-commerce market needs to look at robust business models beyond discounts, V. Paddy Padmanabhan, Academic Director, INSEAD Emerging Markets Institute, said.
There is a course correction happening in the space, which is sign of the market maturing, he said.
Investors have poured in billions of dollars into firms such as Flipkart and Snapdeal, which have been used to discount products and widen customer base with stiff competition from Amazon. None of these firms has made profit. The Indian government recently banned the e-commerce firms from directly influencing prices.
“Discounts are good for an initial customer base and market share. But this way of building business will have a bunch of very happy customers but sad investors and is not sustainable,” Mr. Padmanabhan said. Indian customers, though price conscious, look at the entire experience, he said. “China is a price-sensitive market, but their growth has been built around the buying experience.”
Flipkart saw a slew of funds recently marking down its valuation.
