borrowing an idea from overseas and implementing it in one’s own country is the new success mantra for present-age entrepreneurs. had replicating a successful business model in another country been such easy and rewarding a task, the disparities between developed and underdeveloped nations would have gradually come to an end.
it is obvious that uber, the ride-hailing company, would have employed many market experts while deciding on foraying into other territories beyond us and europe. the outcome, however, is an evidence that their analysis was greatly misplaced with respect to gauging opportunities. uber has called it a day in many asian countries; in india, it is competing with ola and on the back of its deep pockets is making good inroads, but profit is still elusive.
most indian startups fail to take note of a simple fact that the market here is incomparable to that in developed countries. you may be able to acquire customers by offering lucrative discounts and deals, but in the long-run you not only need to break even, but also make profits so as to sustain.
in india, you cannot satisfy a customer so easily and moreover, sellers on e-marketplaces have no push to offer quality products and services to buyers. in the us, for example, a buyer of a good from e-marketplace can rely on the quality of good delivered, but in india’s case, chances of being misled are extremely high. this kicks in returns and refunds, and believe it, even the best economies of scale cannot sustain such high return of goods.
second, indian market is overcrowded, not with respect to customers but also suppliers. this has led to businesses operating on thin margins (just look at d-mart offerings where substantial discounts on prices is luring customers).
the only segment where an e-marketplace can make profits is by selling goods like mobile phones, directly sourced from original equipment manufacturer (oem), which shall allow them to retain some margins after factoring in all operational costs. but even this wouldn’t last for long since subsequently these oem can do away even with flipkart and sell via their own platforms.
for indian startups, comprehending the differences between indian market and consumer habits and preferences and that in overseas is a big challenge, but they need to overcome this.
today, the market is wide open for participants. a new e-marketplace can come up tomorrow and offer additional perks to users and thereby making flipkart obsolete. the fact is that the foundations are so fragile and so severely lack any innovation or value that you can be uprooted any second. give your business model a second thought.
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