The first ball in the Indian e-commerce game has been bowled. But was it a no ball? While believers celebrate each new round of investment poured into e-commerce startups, cynics are crying hoarse that the boom will pretty soon go bust.
In a free-wheeling chat with ET, Rajan Anandan, head of Internet giant Google's India operations -- quite obviously a believer -- makes a spirited argument endorsing the view that e-commerce is booming in India. Once again. To build his argument, Anandan takes a trip down memory lane and points out that the world's largest online retailer Amazon.com went public in 1997 when there were merely 50 million internet users worldwide.
India crossed 100 million users last year despite poor internet penetration and sluggish internet speed. It is a big number, says Anandan because it makes India the third largest internet market in the world by number of users. "Our estimates are that on an average, these 100 million spend about 16 hours a week online.
This is again a big number because in the case of television, with 500 million-plus users, the average viewer spends 13 to 14 hours a week. With 100 million users, we are just getting started," says Anandan. He believes that if there exists an interesting value proposition, Indians will figure out how to get to it.
"Because everything we do, we do it the hard way," Anandan said. Of the four mega trends in the Indian internet space, the first is monetisation of the first 100 million users through e-commerce. In other words, the first big trend will be all about companies figuring out how to make money out of the 100 million users who are online. "Every tech game is a test match.
The first ball of the over has been bowled in the match for ecommerce in India," says Anandan and pointed out that last year, all of e-commerce was about $5 billion in India. Industry estimate is that it will grow to $40 billion in by 2015.
He says "we think we will get to that much before that and by 2015, we will be much bigger." He also brushes the skeptics aside, saying, "In a country, where we have had like some 17 internet startups some of which went bust in 2000, when you see 10 companies get funded, you see everyone go "oh wow!" Ten companies get funded every three hours in Silicon Valley. Think about it."
But are the valuations justified? Valuations depend on your view of growth, says Anandan. Would every single e-commerce company be valued above $100 million? "The answer is probably not," he says.
But if one believes that nontravel e-commerce is going become a $30 billion industry in four to five years, can the leaders who are reasonable well positioned be valued at above $100 million? "I think the answer is yes," says Anandan.
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