Editorial: Forget retail, think e-tail

Oct 14 2013, 03:40 IST
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SummaryTiny Flipkart is valued at double Kishore Biyani firms

When fledgling e-tailer Flipkart has a valuation thats more than double that of Indias oldest organised retailer Kishore Biyanis Future Retail, Future Lifestyle and Pantaloon, you know something big is happening. At R9,300 crore, Flipkarts valuation is not too far awayaround three fourthsfrom that of Indias 10 biggest listed retailers (Reliance Retail is unlisted, so not in the list). This is much the same trend is overseas markets as well. In the US, Amazon has a market cap of $142 billion versus Walmarts $243 billion though its revenues are less than a fourth and it makes losses while Walmart makes profits. While Flipkart-style e-tail is just around $600 million right now, or a little over 0.1% of Indias total retail market (around 7% is catered to by Biyani-type organised sector retailers), consulting firm Technopak estimates that by 2021, over 5.3% of the total retail marketby then $1,152 billionwill be serviced by e-tailers like Flipkart while around 14.7% will be serviced by the Walmart/Biyani-type organised Big Retail. Keep in mind the size of the US e-tail market was just $45 billion a decade ago and is now $225 billlion. In the case of India, in just the last 4 years, the number of active internet users, has grown from 50 million to 120 million, Facebook users from less than a million to 71 million while usage of smartphones has already risen dramatically, it is estimated the number of such devices will rise from 40 million right now to 450 million by 2020. All suggests the etail market is set to boom.

So while India continues to be exercised about allowing organised foreign retailers on grounds this will kill the local kiranas, the e-tailer has quietly made inroads into the market. Indeed, while government policy doesnt allow FDI in e-tail, a loophole in the law has allowed FDI to come in unchecked. It is not this newspapers view that it should be checkedjust like organised retail is growing in response to the changing buying needs of people, e-tailing is the obvious solution to a population that increasingly suffers from time-poverty. And, as products get more standardisedbooks, phones, computers, stationery, clothing, accessoriesthere is little reason why people should have to spend time shopping when the same can be delivered home. Apart from the million-plus jobs that e-tailing can create if it grows to potential, and the retail space that will get freed

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