Digital commerce players need to find sustainable growth model

Digital commerce sales in India have remained flat, so digital commerce companies need to identify a sustainable growth model that can be achieved in a set time frame, according to Gartner, Inc. One of the challenges was that leading marketplaces cut back on promotions and discounts after the regulation banning price competition came out in March 2016. “Digital commerce is at an early stage in India, and consumers are value-conscious, so they are enticed when there are big promotions and steep discounts,” said Gene Alvarez, managing vice-president, Gartner.

None of the digital commerce companies in India are profitable. They typically earn between five-15 per cent commissions of product sales, but the massive discounts on top of the investment needed to expand to more geographies saw those companies losing money. This can be a serious problem when the capital market tightens up. “Once the market tightens, it is a survival game that only those that watch the bottom line and cash flows will win in the end. There is a need to go back to the basics, that is, to operate on a sustainable growth model. Of which, customer experience and data-driven incentives are two fundamental factors,” said Alvarez.