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The Great Indian E-commerce Tamashaa !! – real business vs. valuation bubble

I like to call it – The Great Indian E-commerce Tamasha !!

Well, i believe these so-called-new wave segment, originating in 1999 & reprising around 2007-08, is no less than a confusing game of “on-paper” valuation, “imaginary” user base & “foolish & hyped” VC funding. 

Business to me is an art & science – it is almost a way of life to me. One needs to dedicate your focus, energy, time etc to building a sustainable eco-system of customers/clients, team, suppliers etc. The thing i called business was always meant to be a robust entity made to last, sometimes even passed on thru generation. There was an emotion & a real market value attached to every business. One was known for the brand, you built. More often than not the Indian Businessman remained monogamous – only with one business. With increasing opportunities & competition, the businessman dabbled with more than one brand & became “second-time entrepreneur” & eventually a “Serial Entrepreneur” in some cases. 

Then came in the scenario changing “E-commerce” wave & lotsa techies / fresh MBAs / yuppies hopped on to the train.The age old norms & meanings of the business establishment changed. The very first entrants in this segment were from old school or of independent understanding of business, brand & valuation etc. Hence they tried to make their newly formed e-commerce companies sustainable & robust, just like old times. However they soon realized the road-blocks in doing the same, like  – lack on online infrastructure in our country, limited number of customers/clients for their e-commerce offering & huge amounts of funding required to acquire & retain users etc.

The second part of this wave (2007-08) saw a new pseudo-techie-cum-entrepreneur jumping in only to create negative ripples on the e-commerce wave, these new “.com” business starters had two things clearly etched in their minds – valuation & exit strategy. Everything they did were to hype the valuation & create the best opportunity to exit the business & with the best returns 😉

In reality this approach created, what is now called the “E-commerce bubble” or as i like to call it ” The Great Indian E-commerce Tamashaa “. The online businesses so built had only “on-paper” valuation & no substance / business sense. These brands never made money never even “break-even” in most cases, only had millions of dollars both in terms on VC investments & valuation. Most of the “success stories” we know today are existing only on valuation sheets, they have minimal business with very low margins. Some dont even do 1/10th of the business worth its valuation.

The way up – i say we need more entrepreneurs / techies, believing in the businesses they start & try building of sustainable eco-systems that not only create valuation, but are actually terrific business on the P&L sheets also. I appeal to all young business starters to think about their next e-commerce business as a “BUSINESS” not not merely a valuation game.

We need this happening or the wave might not see beyond 2015-16, the great bubble might just BURST !!!


Cheers!! – HJ 


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  1. @Ankur: for registration, enter first 3 characters of your city and wait for suggestions. Once you click on your city name. the pin codes will appear.

    Hope this helps. 🙂

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