‘Only Large Integrated Players Will Survive The E-com Bubble’

<p>India’s e-commerce revolution will see a lot of small players emerging with similar or differentiated business features, but ultimately, only one or two large integrated organisations will survive the bubble. These large organisations would follow a fully-integrated model marked by better customer interface, efficient distribution network, dedicated payment system and a consistent technology backup, says <strong>Stefen Bradley,</strong> the William Ziegler Professor of Business Administration Emeritus at the Harvard Business School, and author of the bestselling book, T<em>he Broadband Explosion: Leading Thinkers on the Promise of a Truly Interactive World</em>. &nbsp;<br><br>“I won’t be surprised if large-scale retailers in the country, such as Reliance and Tata Group, which already own efficient supply management systems, build strong technology platforms and emerge as e-commerce giants in a short span of time,” says Bradley in an exclusive chat with <em>BW|Businessworld</em>.<br><br>The other scenario in India, according to him, could be a large-scale consolidation wherein strong international e-commerce players or even local organisations (focused on the retail space) will buy out most targets with different areas of strength to build one integrated e-commerce mammoth to sustain in the market.<br><br>“In the case of Alibaba, which really changed the market in China where there was no strong retail business, the company leveraged its digital capabilities and the distribution structure to maximise the business and create the biggest e-commerce company in China,” he says.<br><br>China is fast moving in the direction of online retail, which even prompted Walmart to downsize its plans for the country. But, it is always the nature of a particular market that decides the success of a business. Plus, the complete adaptability of the business to that culture would help in taking the market along with it. Alibaba has a shipping arm that directly ships products to customers. It could build a strong trust factor, which is very critical in online business. Alibaba even certifies the products on its site to ensure no fake product comes into the channel. &nbsp;<br><br>“But it is not necessary that these giants can survive in all the markets as it will fully depend on the nature of that market and the players’ adaptability” he says.<br><br>It is always a mix of revenue models that makes a business sustainable in different markets. While advertisement revenue is still the major chunk, the margin that these companies make on the transaction will purely depend on the volume and scale they can handle on their technology platforms, says Bradley. &nbsp;<br><br><em>As told to C.H. Unnikrishnan</em><br><br>(This story was published in BW | Businessworld Issue Dated 13-07-2015)</p>