E_BUS blog

E commerce business models: Indian Context (B2C Focus)

 

Most of the Indian E commerce companies blindly copied western business models. In the frenzy of developing internet business they forgot to consider "Psyche of Indian consumer". In the context of business model they couldn't articulate clear value proposition. They might have achieved some level of traction during the economy boom period (2004-08). But they surely missed on the sustainability aspect. Supported by the VC's capital their sole focus was on increasing "site traffic", though the number of transaction or revenue figures looks nice on the paper the bottom-line impact decides sustainability.

 

Missing Execution

Due absence of "human element" ecommerce builds the loyal consumer base by focusing on other tangible service attributes like on-time delivery ,wider product portfolio , multiple payment options etc(most of these elements are part of their value proposition).Here again we can see the western influence , while looking on the paper these service elements might look attractive but considering the Indian infrastructure and position of e commerce firms on the learning curve  the "execution" was always in question.

 

First Step: 3V approach

Looking at the resource is not enough here as resource can be developed, purchase or hired but the "efficiency of resource utilization is important". While creating the business models one needs to dive deeper and think about the cost centers and profit centers in detail. So it's a kind of cyclic process where one should gauge the business models on 3V framework (first step) i.e. value proposition, value proposition viability (executions level) and value proposition attractiveness. Unless your "idea "passes these filters you shouldn't go to the next step. Important thing here is to understanding of country context and especially consumer psyche.

In the insightful article written by the Jitender Dabas titled "Why the consumer should not be the KING in India?"  Author opined that India being the high power distance society the consumer's mindset toward service brand has been characterized by "threatening & bullying" behavior. Hence while alluring the consumer rather than pampering with the "peripheral services "the distinction should be made on the core offering. As distinct core offering is copied (as industry lacks patent protection) the implementation is the key. Targeting small and loyal consumer base and running a profitable venture would be better approach rather than doing large number of transaction (of course it is applicable for entrepreneurs who doesn't want to sell their companies )

Regards

Pranav

12DM-099