Nikesh Arora hints at a bubble in the e-commerce space

E-commerce in India went from 500 startups to 10 firms

E-commerce bubble is here and now, many entrepreneurs and investors said at the Startup India event on Saturday. If 2015 was a year of tremendous funding, it also witnessed shake-out, Nikesh Arora, president and COO, Softbank, said at the event. From 500-plus, the number of serious e-commerce companies is down to around 10, he said, indicating a bubble.

To a question on whether deep discounting would continue, Arora advised companies to focus on differentiation in service and customer experience, rather than competing on price.  

Softbank has invested in start-ups, including in Snapdeal and Ola.

Snapdeal’s rival Flipkart, however, was not forthcoming on whether there’s a bubble in the industry. Minister of state for finance Jayant Sinha, who moderated the session on ‘’Show me the money’’, asked Bansal if there was a bubble. “You need to step back and see the real picture… India is on a growth path…these are early days. Some companies may be here and there but internet world is growing,’’ Bansal replied.

Others such as prominent entrepreneur BJ Arun said, ‘’We are in a bubble. We have seen this picture before.’’ Naveen Tewari of InMobi said a bubble may do the start-up world some good even if there’s casualty.

On listing, Flipkart and InMobi said they would like to raise funds in a local public offer, but find the market small to handle the large fundraising required for the country’s internet firms.

“There is a huge dichotomy. The way things stand currently, (it is) close to impossible to list in India. The dichotomy is because of the fact that we belong to India, built the company in India and serve the Indian market. The emotional component is to list in India. But the markets are not ready,” Tewari, co-founder of InMobi, India’s largest valued-ad technology firm told Sinha. “I don't think Indian markets are ready. It cannot absorb the number of internet companies that want to list in the next five years. Foreign money coming in India is the right thing.”

Bansal, co-founder of Flipkart, which is valued at $15 billion, said India should be a top choice for the company, as local investors understand the context of the business, but was doubtful whether the stock market could absorb such a large listing.

India’s largest listed internet company is InfoEdge, which has a market capitalisation of around $2-3 billion, said Sinha.

Shopclues co-founder Radhika Aggarwal said India would be the obvious choice for listing because people understand the business dynamics of the company provided the policy allows it to list.

Sinha said if the government liberalises policies to raise funds in India, Naveen Tewari should look at listing in the country.