Indian ecommerce: The story till now

Edited excerpts from an exhaustive video interview with Sanjeev Bikhchandani, Co-founder, Info Edge (naukri.com, jeevansathi.com, 99acres.com)...

“E-commerce is a more recent phenomenon. I will broaden the definition of e-commerce to all Internet-based businesses. If you look at early forays into that, they began in 1995-96 as the Internet itself came into India in late 1995 but had very low penetration. We launched Naukri in April 1997 when it was estimated that there were about 14,000 Internet accounts in the country. With shared account usage it meant that they may have been a couple of hundred thousand users.

We had no idea where the Internet would go. There were no dotcom valuations then and almost no Venture Capitalists in India. You needed a dial-up Internet line at a time when there was an 8-year wait for the landline. Mobiles had come but with no data. So essentially poor infrastructure, low capital, and a small market. It was done more with less; try and get a revenue model to sustain yourself. That was the era and environment in which we began. But it was easy in some ways as there was no competition. Each era has its own degree of comfort.

Boom, bubble, and beyond

There was a very short first wave of funding for Internet companies in India between 1998 and 2000. There was a dot-com boom and bubble in the US. Some of that spilled over into India. But the bust happened in April 2000 before too many companies got funded. That shortage of capital between 2000 and 2004 meant that very few company survived. But the ones that survived, all went on to become big valuable companies, because they came through the tough test of that dot-com bubble meltdown. They were able to survive because they were getting customer revenue and they were breaking even.

Venture Capital comes back to India

One turning point was when Baazi was sold to eBay in 2004. That began the interest of VCs coming back to India and getting interested in Indian startups. It was slow initially, but it began in right earnest. Then came the global financial crisis (2008). That was s setback for a couple of years, but VCs persisted after that with the (US) Fed infusing liquidity. To a large extent, we have been influenced and benefited by global liquidity. Maybe 95% of risk equity capital is from overseas.

So now a large amount of capital is meeting a large number of high-quality entrepreneurs starting out in an environment like India where there is a massive massive increase in penetration of the Net and of mobile phones and smartphones at the same time: This triage, confluence of these three things, is what has created and given rise to a lot of the startups and unicorns that we are seeing today.

When e-commerce will come of age

Indian e-commerce will finally come of age when companies become profitable. Has it acquired scale? The answer is yes. Are there large sections of Indian society that are left out of this boom? The answer is also yes. India is, I guess a mish-mash of several things happening at the same time. People who are benefiting and buying in this e-commerce boom. People who are making it happen: The startups, the entrepreneurs, and the employees there. People who are investing in these startups and then earning a return. Large corporations like the Tatas and Reliance acquire companies. The entry of foreign players like Amazon and Walmart. It’s pretty much all happening right now.

In all of this if you have a backdrop of a fast-growing economy, then there will be large successes for the large number of people. If the economy however slows down and if the global equity dries up if the Fed raises interest rates multiple times in the next two years, then it’s a different environment. It remains to be seen how it will pan out.”

These are excerpts from a video chat with Editor Sunil Rajguru and part of our PCQuest 35 Years Series on the Yesterday, Today & Tomorrow of Technology.

Check out the complete interview...