What is damaging e-commerce in India.

Since early 2011 the E-commerce sector in India has seen major funding and the names like Flipkart, Snapdeal, Letsbuy, Yebhi Myntra are abuzz with online and TV advertising and not to miss the SMS promos. Now after almost a year we see a lot of them bleeding and few already out of the game. There are many view points regarding the cause, and like everyone I point the ones that are causing major damage to this industry.

1. Wrong positioning : The biggest mistake is the heavy discounted customer acquisition policy as this has spoilt the mindset of user to think e-commerce as a discount destination. The USP of e-commerce should not be discount rather it should be the comfort of shopping from home/office. Most have failed to communicate this message to users.

2. Post sale is more important : The ecommerce players are spending more on presales that is customer acquisition via online and TV commercial and are not building good post sale team and this makes many angry customer to never comeback. Its better to build a good customer retention team as that will also trigger a lot of WoM publicity.

3. Haunting past: The previous wave of ecommerce back in 2000-2001 had a lot of problems with payment issues and frauds and this has resulted in newer options like CoD, CBD to come in which are way too expensive . But there needs to be a better approach to this, eBay with its paisa pay does a good job.

4. Dont ignore small towns: The ecommerce sector is estimated to grow huge but while these estimates account for growth from smaller towns, there seems to be very less importance given to them. Delivery still takes weeks if its a non metro. The idea should be to make it faster as they once the small town people start buying online it will solve their pain and as a result there will be a lot of repeat orders.

5. VC like mindset of founders: the founders of most ecommerce are chasing funds rather than maturing the product and as a result we see most of them are seen as a success when they get are funded. This whole system is somewhat problematic. Ideally your profit should come from selling to consumer rather than getting from VCs (and then further burning it on stupid customer acquisition for next round!)

There are various other issues but most have been discussed again and again. 

Note: I personally believe there is huge scope for e-commerce in India but the execution is something that has to be figured out well.

This article was first posted on my blog : What I Think Is …