In 1999, K Vaitheeswaran, together with five friends in the IT industry, founded India’s first e-commerce company, Fabmart.com. The venture also built a physical retail chain called Fabmall, which was later acquired by the Aditya Birla Group and was rebranded as More. Vaitheeswaran carried forward the online venture under a new name, Indiaplaza.com. But despite being the first mover, Indiaplaza could not deal with the aggression of the newer players, Flipkart and Snapdeal, and shut down in 2013. In his upcoming book `Failing to Succeed’, Vaitheeswaran cautions entrepreneurs about the dark side of starting up.
Were you caught on the wrong foot by trying to build a profitable company at a time when big bucks were coming in?
In the profits vs GMV (gross merchandise value) battle, GMV won. From 1999 to 2013, we raised only $9 million for our e-commerce company. Today, people lose that much in a month. I came after 10 years working for Wipro. I was trained to make profits. We carried that story to every investor and we realised that they were not listening to our story. The pitch deck said Indiaplaza – only profitable e-commerce company. Today, if I take the same story, I would have made a lot of money. It was a timing issue.
What was the feedback you received from VCs?
Hardly anybody gives you good feedback. They just drop you a polite mail. Sometimes they’ll say market is not big enough, even though they put a lot of money to build one. The pitch that could have worked then was the numbers – number of people expected to come online.
Do you think the current Indian e-commerce companies will ever be profitable?
Undoubtedly no one will make a profit. You are hoping to be the last man standing. You can never be the last man standing since there is always a person with more money than you. And 50% of all customers that shop online do it for discounts and delivery. So, it’s a hard game to win. One thing you don’t want to do is fight with a global giant who will do whatever it takes to take your market.
Source : India Times