While anecdotal and empirical evidence both confirm online shopping is becoming more popular, e-commerce businesses continue to bleed because consumers need to be pampered with discounts, report Anushree Bhattacharyya in New Delhi. The many rounds of sales that e-retailers launch during the year are a sign it is not easy to convince consumers to buy. So while revenues are going up, e-retailers are reining in spends on advertising, expenses on employees and other costs so as to ensure not too much cash is burned.
For a clutch of 12 companies—across verticals—losses went up by about 6% in 2016-17 even though revenues increased. Industry experts say the losses could be as high for 2017-18 since discounts were as attractive. While the bigger players in each of the segments will grow, smaller businesses may fall by the wayside. There has been some consolidation but more is on the way says Sreedhar Prasad, partner, KPMG. Indeed, companies are chalking up new strategies and schemes to stay ahead of the competition.
Meanwhile, investments in e-commerce and start-ups fell 35.5% to $3.59 billion between January-June; Fintech attracted 50% less at $908 million while e-commerce investments reduced by as much as 624% to just $627million.
