“I expect more consolidation in the next 12–18 months”K. Vaitheeswaran, fondly called Vaithee, founder of Indiaplaza.com, which is one of the leading e-commerce portals in India, was the real early mover in e-commerce entrepreneurship in India. His Fabmall.com, founded as early as 1999, changed its name to Indiaplaza.com after the off-line Fabmall stores were acquired by Aditya Birla group, now called More, in 2006. There are level-headed entrepreneurs who take ups and downs in their stride and scale up when the opportunity presents itself. They don’t go hammer and tongs and head to a mighty fall but go slow and steady to build on earlier successes. Vaithee prefers to play it safe and stay on for a long haul. In his perspective on e-commerce in India, Vaithee begs to differ from the crowd and has enough reasons for it. Catch up with Vaithee as he explains e-commerce in India, in a conversation with YourStory.in.
What do you have to say about the recent e-commerce boom, the hype in the media and investment infusion?
E-commerce is certainly exploding and certainly the industry is growing. Then there would be certainly investor interest, and media is interested. And, we are happy that media is showing a lot of interest in understanding e-commerce as an industry. I guess we are okay with that.
What do you have to say about all the ad-spend done by e-commerce companies currently to acquire mind-share of customers?
I think there are two approaches. Some e-commerce companies are taking the approach that they are spending a lot in terms of advertising and brand awareness, and they will acquire customers, maybe in an unsustainable manner in terms of costs by expecting repeat transactions from customers over the year. They aim to recover ad costs by repeat transactions, which may not happen.
When we look at ourselves, we ask, Are we the largest e-commerce company in India? Certainly not. Are we among the top 5 e-commerce companies in India? I think so. Are we the largest loss making e-commerce company in India? I don’t think so. Do we have the best financials in the top 5 e-commerce companies? Absolutely. So, it depends on what the success parameters are, so we have chosen a path for ourselves and our path includes financial stability, robustness and a model that we believe is sustainable, and will pay dividends for us, for our stakeholders and for our customers in the short-run and the medium-term.
In the long run, nobody knows what will happen. E-commerce in India is evolving so fast, nobody has a clue. Therefore we want to make sure that we are a profitable company in the short-run. And therefore our model doesn’t allow us to spend like that. Time will tell which model is right. It is more than possible that we are wrong, but we certainly cannot be denied the right to think like that.
On consolidation and valuations . . .
I think any industry that is growing at this pace will attract investments also entrepreneurs, and people will constantly play around with their business models. I am not surprised at the fact that so many e-commerce companies are sprouting. I believe more will come in. And, just like the way of life, only a few will flourish and go on and succeed. Many will close down, many will get acquired, so I am not surprised at the consolidation. I expect in the next 12–18 months a lot more consolidation to happen and it is the way with any industry that is early stage and growing significantly. Not surprised at all, more will happen. Valuation I believe is a function of money in the bank and negotiation.
With players like Amazon soon planning India launch, what do you see happening?
We are a partner on Junglee. We are one of the sellers on Junglee. We have got our products uploaded, and we are working closely with Junglee. We think that there is lot that we can learn from them, because they know what they are doing, and there is lot that they can know from us because we know India better than anyone else. It is a good partnership that we have got going. But, we have no idea about their launch plans in India.
Read our earlier coverage on Indiaplaza journey here.