Indian Startups Must Rejig Strategy To Stay Afloat
According to a Goldman Sachs report, the Indian e commerce market will be around $ 228 billion by 2030, slightly lower than today’s US e-commerce market of around $ 280 billion, but 10 times as large as India’s current e-commerce market
India’s top ten startups which have reached the $1billion-mark have made us proud. Out of 230, most legendary unicorns present globally, Indian unicorns make around 5 per cent of the overall market share.
Big names like Flipkart, Ola, Snapdeal, Quickr, InMobi, Zomato, Shopclues and Paytm, have scaled up at lightening-speed and grown up in sales and customer-base manifold. But is this enough? How long this will sustain?
Experts from the ecosystem often point out the factor of unpredictability and the possibility of consolidation or tie-ups in major players in different sectors, as and when the top-most players wish to expand.
Therefore, one example of this is Uber-Didi deal between two of the most dependable cab carriers from the US and China. The two fiercely competitive taxi-hailing services were leading an epic battle for the past two years, but it finally ended up with Uber giving up its operations to the local driver in China- while it’s also taking a stake in the same company- Didi Chuxing. This news was the most-hard hitting for perhaps for the Indian-born Ola, backed by Didi. It’s been speculated that Uber has freed its hands to grab the Indian market in a big way, as despite investment crunch, Uber has managed to raise a committed investment of $1billion, this year.
It’s a small world, this realisation comes once again when the e-commerce businesses India is thriving upon, fight with USA’s Amazon and Chineese’ Alibaba for sustain as a dominant player in the domestic site. The foreign majors have tried hard strategically to wipe of desi e-tailers and are projected to go beyond $100 billion by 2020.
Not just that, for Amazon- capturing the Indian market is a big deal, since it wasn’t able to overcome Alibaba in China. So, it is eyeing a huge investment in India to feed its growth ambitions. However, Alibaba too is making a move towards the second-largest market on the globe, but taking its sweet time to establish its strategic stakes firsts. Its delayed moves cannot be judged for a non-interest in the Indian market. Though, Indian e-players Flipkart and Snapdeal hold more than 70 per cent of the marketshare, Amazon has scaled up quickly to hold at least 15 per cent of the online retail space.
The intent of the global e-majors clearly has sweated out the young Indian unicorns, directly as well as indirectly. For instance, Alibaba’s stakes in Snapdeal is no big secret and further it has also come to invest in Paytm, which is one of the most recent success stories India has to flaunt, post demonetization. The Chinese e-retailer is also said to be in talks with Flipkart to buy in a stake in the Indian firm, and readying its core team to operate from India soon.
According to a Goldman Sachs report, the Indian e commerce market will be around $ 228 billion by 2030, slightly lower than today’s US e- commerce market of around $ 280 billion, but 10 times as large as India’s current e-commerce market. As the country witneses economic growth leading to higher per capita income and broader internet penetration, e-commerce in the country can witness exponential growth. Amazon believes that Indian e-commerce is a trillion dollar opportunity and both Amazon and Alibaba are working towards capturing this potential.
Next, we are facing stiff competition from the Chinese telecom companies which seem to be now targeting only the Indian-subcontinent more than anything else.
With the very attractive 280-million smartphone market ready in India and faltering Indian devices, foreign manufacturers stand a better chance to serve the customers here. Especially, with the government extending a supportive hand for manufacturing in India and a digital-India mission on mind, the Indian brands like Micromax, Intex and Lava are really suffering due to a fleet of cheap Chinese phones entering the market together. After Oppo, Vivo, Lenovo, Xiomi some other brands like Holitech and Wind Communications too have expressed their interest in expanding business in India.
In terms of other sectors too, it’s quite surprising to know that India’s dependence on Chineese imports have rather grown this year rather than being cut-down, since the idea was to put a blanket ban on Chineese products. The sector here we are trying to refer is the automobile industry and tyre-imports to be precise. The threat for the domestic tyre-makers became grave when imports in the truck and bus segment surged by 57 per cent in April and May, 2016 and also rose about 20 per cent in the passenger car segment.
Another big push down for India has come in the solar power sector too, since the falling price of solar power is boosting demand for the local renewable power industry but is bruising local solar panel makers who are struggling to compete with low-cost imports from China.
Local producers of batteries and convertors are adding capacities to meet increasing demand at a time solar power tariff has fallen to Rs3 a unit in the latest auction in November from what used to be over Rs12 a unit six years ago. Industry executives said local panel makers are hoping for intervention from the government.
By discussing the current scenario in multiple sectors, it is clear that Chinese goods and services are a big threat to the India ‘glocal’ (global and local) market today and tomorrow. Something extra-ordinary needs to done in order to fulfill our dream of ‘Make in India’, otherwise the true essence of the mission would be unachieved in the long run. Right now, Indian companies are doing well and have managed to be highly-valued or join the unicorn club. But that’s not enough. Indian business-models need to be global in their outlook and sustainable, so as to not merely become an area for majors to acquire or invest in.