Trends

The happening industry to be in today

Posted by:   Prakash Kewalramani Date:Oct 09, 2015

The happening industry to be in today ecommerceOur last month's poll leaves absolutely no doubt in terms of the happening industry to be in today's world - ecommerce. More than 50% of the respondents voted for ecommerce, with IT / ITES / BPOs / KPOs being a distant second with 25% of the votes polled.  
 
The reasons for this thumping response are many:
 
1. ecommerce is still a nascent industry (8-10 years old at best), growing at a scorching pace (over 50% per annum). Some companies are growing at even 200% - 300% per annum. This throws up manifold employment opportunities since the companies are scaling up real fast and it is the Human-Capital that is mainly driving the growth;
 
2. the industry is driven by young, highly qualified professionals from premier engineering / B-Schools. This breed of entrepreneurs is highly funded and very ambitious and aggressive;
 
3. there are already a sizable number of Unicorns (valuations exceeding $ 1 billion) including Flipkart, Snapdeal, Olacabs etc. The valuations of some of these companies like Flipkart are higher than valuations of well-established & respected companies like Tata Motors, M&M etc. which have been existing for over several decades;
 
4. the industry has within a very short time produced a large number of young (under-35) $ billionaires like Sachin Bansal of Flipkart (within 8 years of start);
 
5. the focus of Global VCs is on ecommerce and a lot of money is being pumped into this industry
 
6. since growth is the driver of the ecommerce industry and very little domain expertise exists within the industry, a lot of comapnies in various verticals have been poached for employees. Given the demand-supply imbalance, salaries offered are sky-rocketting & often obscene. Fresh Graduates of premier B-Schools with no prior experience are now being wooed with starting salaries over Rs.25 lakhs per annum! No wonder there is massive rush for people flocking to get into the ecommerce industry. Recent news reports have indicated that even very senior professionals from companies like McKenzie (the Global Management Consulting giant) have left their organisations and signed up with ecommerce firms.
 
Do ecommerce firms provide value to consumers? Is such value sustainable? Yes, the commerce firms (at least some of them), do provide immense value as compared to brick-and-mortar organisations (e.g. Retail outlets):
 
1. the convenience of 24-hour surfing at a time convenient to you;
 
2. the delivery is at your doorstep! Very convenient! Saves you time, money;
 
3. most ecommerce have "liberal" return / refund schemes with no questions asked (e.g.Amazon);
 
4. the reach of ecommerce firms is phenomenal - even to small tier-3, tier-4 towns;
 
5. some sites have been able to build up credibility (e.g. Jewellery sites who give quality certifications from internationally accredited bodies
 
Points to note - Whilst there is a hell-of-a-lot of euphoria about the ecommerce industry globally and in India, the following facts must be kept in mind before making a dash for this industry:
 
1. as it always happens, a lot of me-too companies start up operations. There is over-crowding, funding dries up and companies start pulling down their shutters (just today there were reports of 3 such companies winding up operations);
 
2. VC / PE funds are unpredictable & opportunistic in nature. One can never predict when the VCs pull the plug or start calling the shots or taking over Corporate boardrooms (a-la: Housing.com);
 
3. Till date, the ecommerce firms have grown on the back of heavy discounting of their merchandise. There have been very little efforts for brand-creation and building consumer loyalty. Today, consumers surf through 3-5 sites and place order on the site which gives the lowest price for a product. The result is that a majority of the ecommerce companies are severely bleeding and their annual reports having huge blotches of red ink!
 
The likely longterm scenario - Ultimately, as it always happens, there is bound to be consolidation in the industry. Some firms will shut down, others will be swallowed up by larger firms. Only those firms with branding (?) and deep pockets would survive in the long run
 
So, what should be the approach of a candidate seeking a career in ecommerce industry? Whilst the grass definitely looks green on that side, one should make a detailed study of the prospects of the target organisation in terms of the long-term prospects. One needs to understand the strategic business & financial model of the organisation before taking the plunge. Then there will be no looking back!!!

 


About the Author:

Prakash KewalramaniPrakash Kewalramani is the promoter of Impact HR Services since 1994 and JobMantras.com since 2015. An engineer from IIT-Delhi and MBA from IIM-Ahmedabad, Mr. Kewalramani has over 17 years experience in Senior Management, Executive Search and Marketing with reputed multinational organisations. Mr. Kewalramani is a past-Chairman of ERA (Executive Recruiters Association) and is the current Chairman, Ethics Committee, ERA. 

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