Once more ‘e-commerce’ is on the lips of entrepreneurs and investors. This time the surge is bigger and better than before
Nobody saw it coming. Nobody wanted to. It was, after all, the summer of 1999. The spirit of the times was heady and a thousand entrepreneurs had bloomed. Fabmart and Firstandsecond.com wanted to be the Amazon — the giant book store — of India. Rediff was selling knick-knacks on its e-commerce channel. Sify too had joined the bandwagon. Apnaloan was promising to ‘sell’ loans online. Shaadi.com wanted to find your dream “other”. And then on April 4, 2000, Nasdaq crashed.
K. Vaitheeswaran, the CEO of Indiaplaza, remembers the moment vividly. Many venture funds of that vintage perished. Entrepreneurs were worse off. “There were almost 1,000 e-commerce businesses in India at that time. All of them closed down,” says Vaitheeswaran. In the space of six months, ‘dotcom’ had gone from meaning ‘hip, cool; inheritors’ to ‘naïve, paper tigers; lambs to the slaughter’. Hell had frozen over. But so much chaos, so much life had been unleashed.
Could something have survived — spirit, derring-do — the carnage?
Kapadvanj, a small settlement of 50,000 people, is an hour’s drive from Ahmedabad. It hasn’t changed much in the last 10 years. Yes, there are a few more cars and thanks to DTH and pay-per-view, the latest movies get screened much faster, but life moves at an easy pace. Of course, the Internet connection is much more reliable. And Rinkal Shah is all grown up now.
This 26-year-old Web designer’s house in Triveni Park has all the things you would find in a modern house: LCD TV, DTH set top box, laptop, refrigerator and of course Shah’s favourite, Nikon D5000 digital SLR.
Now that you are excited, let’s cool things down a little bit. The retailing sector in India is worth Rs. 500,000 crore. Out of this, Rs. 30,000 crore annually comes through that child of the Noughties, modern retail. When the Internet entrepreneurship and venture capital sector were dying in 2000, modern retail — Big Bazaar, Hypercity, Croma, Mobile Store — was coming to life. Shopper’s Stop and Crossword too acquired the form they sport today. And frankly, the entire online retailing sector of today — Flipkart, Yebhi, Letsbuy, Myntra, Cbazaar amongst many — put together don’t even add up to Rs. 1,500 crore in sales.
“We thought our biggest challenges would be to create a good Web site, provide a wide selection of books and provide excellent customer service,” says Binny Bansal, 28. Today their secret sauce is their in-house, delivery network. The scale is massive — 400 delivery employees at present and with a plan to scale that to 1,000 by the year-end. Of course, they can afford it thanks to the $31 million in venture capital they drew!
(This story appears in the 29 July, 2011 issue of Forbes India. To visit our Archives, click here.)