Mohandas Pai predicts shake up in e-commerce in 2 years

24 Dec '15

2 min read

Even as online shopping grows exponentially in India, Chairman of Manipal Global Education T V Mohandas Pai has severely criticised the approach of e-commerce players for offering discounts and termed them as subsidies.

He predicted a shake up in the e-commerce space in the next couple of years, or "even earlier".

Pai, a former Director at Infosys, faulted the business model adopted by e-commerce players, saying the model promotes growth without building customer loyalty.

Indian e-commerce majors like Flipkart and Snapdeal are just trying "to grow fast by giving subsidies, which is wrong because there is no customer loyalty".

"And in the last quarter we have seen... Amazon has overtaken them because it has superior technology and better processes. Snapdeal has fallen back," Pai, told a news agency in Hyderabad.

"I think, a very good shakeout... may come, maybe, in the next one or two years. Some of the weaker players will fall," he said.

While e-commerce majors are reporting sales growth of more than 100 per cent, the boom has been driven by persistent advertising and deep discounts, leading to huge losses and prompting analysts to question whether online retail can ever be a profitable business.

Earlier this year, a report by the Indian financial services unit of UBS Group AG said e-commerce is a viable business in India, although online retailers may take as long as five years or more to become profitable and could be overvalued currently. (SH)

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