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E-commerce companies should focus on building a long-term sustainable model and stop depending on discounts for attracting consumers, says Hari Menon of BigBasket, an online grocery provider.
Speaking at a Madras Management Association conclave on ‘Game Grows Bigger Social Web 3’, Menon, Co-Founder and Chief Executive Officer, Bigbasket.com, said most of the companies spend 70-80 per cent of their funding on acquiring customers.
“Though buying customers is important in the beginning, continuing that as a business model is not sustainable,” Menon said.
Even as the companies are moving away from discounting, funding scenario is also changing. The investors are clamping down on funding as their inclination is shifting towards business models that will ensure profitability.
Menon said though it might reduce the growth rate and affect valuations, it will aid in strengthening e-commerce business.
Stating that the companies should correct the current model and focus on long-term sustainability, Menon said the time has come for e-commerce companies to concentrate on unit economics and to begin consolidation.
Apart from funding, companies will witness data analytics playing a bigger role in the way a consumer shops. “We call this 360 degree approach to analytics that will see what a customer does in a shopping website,” Menon said.
An analytical platform can track consumers’ shopping habits and capture transaction details. Based on the buying history of a consumer, the system will populate the data when he shops the next time reducing the time taken.
“This will help the customer to discover new items that are introduced by market players,” Menon said.
Ravi Viswanathan, President – Growth Markets and Head Chennai Operations, Tata Consultancy Services, said analytics breaks down the vast amount of information available on the internet and helps researchers make sense of that data.
“Analysing what data lies underneath will help profiling a consumer. This will aid companies to increase customer spending through ads and marketing,” he added.
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