Business of Value Ecommerce v/s Valuation Ecommerce [No space for iamtooakart]

[Editorial notes: Guest article contributed by Amit Monga – he earlier cofounded eSportsBuy, which was acquired by Snapdeal. Amit shares great piece of insight on building an ecommerce business in India]

Ecommerce is on fire and suddenly there’s a rush to catch the plane before it’s too late. The fact of the matter is ecommerce has already reached a stage where there’s no space for ‘iamtooakart.com’. It is time when the big guns with deep pockets are going for expansion while keeping an eye on the path to profitability. The not-so-big ones are struggling to raise next round of funding since most of the investors are in wait and watch mode. The question for a new entrant in ecommerce in this stage of consolidation is – how are you planning to play the survival game?

To me, you can only enter the game successfully and survive if you play the value ecommerce rather than valuation ecommerce. Valuation ecommerce is only for big guns who need to justify the investments and satisfy the shareholders. For the new entrants, only way to differentiate is by focusing on the customer and building a business, not transactions. Unlike the 2000s, the internet fundamentals are very strong with 100 million internet users this time as opposed to 4 million at that time.

With the kind of internet penetration our country is aiming at, the number of online buyers is expected to go up from current 7 million to 50 million in next 5 years. These increasing numbers also provide increasing opportunities to fulfill the needs of all kinds of customers. Need of the hour for a new entrant is to find answers to these fundamental questions before registering a domain name – Who is/can be your customer? Why would he/she buy from you? (Online is cheap is not enough anymore) What is the market size of such customer need? How will you differentiate from your potential competitor? How much time and effort are you comfortable putting in without cribbing for investment or visible results?

To give an example of value ecommerce (i.e. a service or a feature that lets you offer a value to your customer and makes them come back) , consider a company where customers are mapped to customer care executives depending upon the customer transaction history and skillsets of the executive. For the customer, it will be a single point of contact rather than a random guy for every other call/ query. He/she will have more trust and better communication while transacting online. And, if the customer is not satisfied with interaction he/she can request a change. On the other hand, company can quickly differentiate themselves from others only by managing customer mapping, executive ratings and specialized training. Just a raw thought, but the point is there is no escaping innovation and a need to add value to whatever you are trying to do.

An important lesson I have learnt in my short entrepreneurial stint is over-night success takes at least 3-5 years. In all exceptions, either you are lucky or you end up selling your business to someone ! It needs a fair amount of maturity and financial security to carry a venture in our country. For every venture that survives ten fail at the same time. But those who pay premium to building teams, remain customer focused and continuously innovate to define the business value are the ones who stand out. So, to all the newbies in ecommerce – be unaffected by the valuation kolaveri, spend time to define the business value and welcome to the roller coaster!

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