Kumar Mangalam Birla joins other industrialists to prepare logging on to e-commerce
When Kishore Biyani started his online venture futurebazaar.in in 2006, it was an idea beyond its time. Either ways it was seen as another channel for his hypermarket business to sell products. Six years later the country's top retailer (then) saw the first big onslaught of online retailers Flipkart, Snapdeal, Myntra and Jabong. They came as disrupters, unlike the online mall or marketplace run by eBay.
Fast forward two years and these babies have grown superfast and now command more value than almost all Indian physical retailers put together. That gives them resources to not just steal customers from offline peers but strike even a harder blow.
Indeed, the warnings have not been ignored. After initial reticence, India's top business houses are boarding the gravy train.
After Cyrus Mistry said e-com is one of the new opportunities for Tatas, Mukesh Ambani indicated that he is not content with conquering offline retail and Anand Mahindra acknowledged the power of e-com even though he is currently focused on extending it as additional channel for Mom & Me, now Kumar Mangalam Birla appears set to join the e-com rush.
In an interaction with Bloomberg, Birla said he is looking at the online retail segment even though the group has not identified a business model to make its mark. Notably, the group runs a super market chain under the 'More' brand; so it is not completely new to the idea of retailing products.
"If large conglomerates are coming in, then they will have to acquire what is existing. But in Indian business history, we have seen large groups put in all their resources behind creating a venture from scratch," says Sanjay Nath, partner of Blume Ventures, an early stage VC firm.
It is here that India Inc faces a catch. Entering e-com now grounds up, when the market has seemingly consolidated among a handful of players with repeat consumer traffic, would be tougher than setting up a factory and using existing network to sell products. But it is not impossible. If Amazon can come in late and break into the market within a year of launch, the heft of cash rich Indian business houses cannot be ignored.
How big can they become is another matter. Note, Walmart is not counted in the same breath as Amazon when it comes to buying stuff online. And Walmart is the thousand pound gorilla of retailing.
Having said that some business houses have shown they can be a late comer and yet make their mark in a business building from scratch.
Another option is to acquire what is already there or revive those that are dead (read: IndiaPlaza and so on). The latter comes with legacy issues, though.
It is here that India Inc faces another catch. Flush with VC funding, the leaders in the online retail space may not be up for sale, at least immediately. The start of a new long-term bull run, as analysts predict, also provides for an alternative option for an exit for the VC backers in the e-com ventures.
Large business houses can, however, snap up those e-com ventures at the brink and rebuild them. As for the big players, who knows, everything is up for sale at a price.
(Edited by Joby Puthuparampil Johnson)