India's e-commerce space may see a shake-up in 2 years: Pai

T V Mohandas Pai
Slamming huge discounts and cashback offers from e-commerce players as "subsidies", Chairman of Manipal Global Education T V Mohandas Pai has said the industry may see a shakeout in the next two years, or "even earlier".

He faulted the business model adopted by e-tailers, which he said promotes growth without building customer loyalty.

Biggies such as 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, the former director of Infosys, told PTI here.

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

On the start-up growth scenario, Pai said: "Many of them will die because they are not competitive. They are being kept alive by dollars of money."

According to him, the country currently has 18,000 start-ups creating a value of USD 75 billion, with three lakh people being employed in the space.

He projected 1,00,000 start-ups with USD 500 billion of value and generating 3.5 million jobs in 10 years.

"Those who copy successful start-ups will die and many others would fall by the wayside. Top 10-20 per cent (of the start-ups) will rise and become major companies", he predicted.

On the Indian IT sector, Pai said the challenge is to change the business model to boost the digital economy and the market.

"They (Indian IT companies) have to go to the new digital era. Some of them are struggling. That's the challenge. They should be doing more digital," he suggested.

Pai played down suggestions from some quarters that India's IT employees are "overworked and exploited".

"When you have 18-20 per cent attrition (rate), where is the exploitation? It (suggestion) is ridiculous", he added.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel