E-retailers must scale up to become profitable

While e-retailing continued to gain momentum in 2019-20, most players reported losses for the year. For a clutch of e-commerce companies — Amazon, Flipkart, Myntra, Paytm, Zomato, PhonePe, Amazon Pay and First Cry – losses rose to Rs 17,617.15 crore from Rs 16,747 crore in 2018-19. Combined revenues, however, grew at a brisk pace, increasing by over 40% to around Rs 26,384 crore.

As experts point out, it’s not as though the business models are in themselves unviable, it’s merely that companies continue to invest in acquiring customers. “It is not so much of a unit economics challenge for some of the scaled-up players,” observes Arpit Mathur, partner, Kearney. Mathur explains it is about what is the pace at which they want to continue to acquire new customers because that is the key determinant of their overall profitability.