Change in the Indian e-commerce business model

Change in the Indian e-commerce business model is coming.

Times of India reports that slamming huge discounts and cash-back offers from e-commerce players as "subsidies", chairman of Manipal Global Education TV Mohandas Pai has said the industry may see a shakeout in the next two years, or "even earlier." He faulted the business model adopted by e-tailers, which he said promotes growth without building customer loyalty. Biggies such as Flipkart and Snapdeal are just trying "to grow fast by giving subsidies, which is wrong because there is no customer loyalty."

"And in the last quarter we have seen... Amazon has overtaken them because it has superior technology and better processes. Snapdeal has fallen back," Pai, the former director of Infosys, told PTI. "I think, a very good shakeout... may come, maybe, in the next one or two years. Some of the weaker players will fall." On the startup growth scenario, Pai said: "Many of them will die because they are not competitive. They are being kept alive by dollars of money." According to him, the country currently has 18,000 startups creating a value of $75 billion, with 3 lakh people being employed in the space. He projected 1,00,000 startups with $500 billion of value and generating 3.5 million jobs in 10 years.

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