The hype and hoopla surrounding the e-retail sector has dimmed significantly.Enviable unicorns in this space such as Flipkart and Snapdeal have lost their earlier mythic appeal and the air of invincibility.The climbdown is the result of the downward revision of their once stonking valuations that defied the laws of gravity. For instance, in the case of Flipkart, India’s most valuable start-up, the markdown in valuation has been to the extent of 30-40 per cent.
Diminished valuations is not the only concern for India’s feted start-ups. Once liberal investors are now turning tight-fisted, stanching the generous flow of funds. This deluge- to- drought turn of events is now forcing a rethink across the sector. To rub it in, investors are now handing down a virtual démarche to companies to shore up their unit economics and sharpen the focus on performance.
With the mood now sombre, e-retail players and especially those in the food retail business are now making course corrections and pivoting their business models. PepperTap has abandoned grocery deliveries in favour of e-commerce logistics. For many other businesses in this space, the monomaniacal focus on customer acquisition and growth is shifting to profitability and sustainability.
All of these changes remind me of some home truths. One is about the ability to trim one’s sails to the wind. It is all about adaptability and making your model resilient to the slings and arrows of fickle fortune. Businesses that sail through the tough times will ultimatley turn sustainable, proving another maxim – tough times don’t last, tough businesses do.