‘E-commerce firms face cash crunch on more discount offers’

Our Bureau Updated - August 05, 2013 at 09:43 PM.

Indian e-commerce industry has been facing a funds crunch mainly due to offering more discounts, Deepa Thomas, e-commerce Evangelist, eBay India Pvt Ltd, said on Monday.

According to Thomas, even though the industry is expected to grow at a very healthy rate to worth $1.8 billion in 2013, the “venture capital funds are drying up”.

“There is a definite drying up of venture capital funds. Many e-commerce companies, especially those who were offering services, were shut as they discounted to death. So, the money got burnt,” Thomas told reporters here on the sidelines of a seminar on retail industry – Youth Brigade on Indian Retail – organised by MCC Chamber of Commerce and Industry.

Rising net users

She added that the growth would, however, be driven by the increasing Internet user base. “Currently, about 69 million of the total 130 million Internet users visit e-commerce sites. Of them, about 14 million do transactions. But at least these many users are visiting the e-commerce sites and checking prices,” she said.

According to her, the “first target base” of all the e-commerce companies is the number of Internet users.

Stating that the e-commerce industry is also looking forward to Indian venture capitalist firms, Thomas said: “The companies that have a sustainable business model will get funding. If you are a small company, you need to be very clear on focus and a customer base.”

She also warned that the e-commerce companies that have been “trying to clone their bigger counterparts would not do well”.

ayan.pramanik@thehindu.co.in

Published on August 5, 2013 16:13