Indian Internet company valuations - Stop Blowing Our Bubbles(tehelka.com)
tehelka.com
Indian Internet company valuations - Stop Blowing Our Bubbles
http://www.tehelka.com/story_main50.asp?filename=Ws020811OPINION.asp
14 comments
1 billion dollar for Flipkart is insane. No USP, minimal recognition, and a lack of focus that drives me crazy. I used to frequent them a lot. Back when they had books as their primary focus. But now they are peddling mobile phones, and everything under the sun with books as an afterthought. Don't get me wrong, they still are the best online book retailer in India and I use them a lot, but if any body on this forum has a better idea, count me in as your first customer.
> But now they are peddling mobile phones, and everything under the sun with books as an afterthought.
So... like Amazon?
So... like Amazon?
There is only so far you can go with selling books in India.
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What made you think books are not given the love they need? expanding their products doesn't mean focus is lost.
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Here is how I think about this. Amazon's market cap is about 96 billion. Having a valuation of 1 billion would imply that FlipKart is, as of today, worth about 1/100 of the whole of Amazon (in every country, across all products including the Kindle and the AWS product line). I don't see it as of today(but am willing to be educated).
Due Disclosure: I have used FlipKart and I do like it. But that is because the alternatives in India are non existent or horrendous. With Amazon coming to India next year, that will change.
And it is not all doom and gloom for FlipKart. I suspect being overvalued is good when you are trading equity for money. All they need to do is to find a strategy to counter Amazon to survive and thrive. They don't have to beat Amazon on every measure to have a succesful business. They'll have to pull off an Intuit vs Microsoft style defence. I hope they do. From all I know, they are bright people. They've crushed their local competition (Infibeam say[1]) with superior execution.
Competition is awesome. Good for us customers. The local bubble is (imo) just a reflection of the global bubble.
[1] Trivia: I was having dinner the other day with an Infibeam ex employee and asked him why FlipKart won so convincingly over his ex employer and he said "FlipKart is run by engineers. Infibeam is run by managers. Why are you surprised?".
Due Disclosure: I have used FlipKart and I do like it. But that is because the alternatives in India are non existent or horrendous. With Amazon coming to India next year, that will change.
And it is not all doom and gloom for FlipKart. I suspect being overvalued is good when you are trading equity for money. All they need to do is to find a strategy to counter Amazon to survive and thrive. They don't have to beat Amazon on every measure to have a succesful business. They'll have to pull off an Intuit vs Microsoft style defence. I hope they do. From all I know, they are bright people. They've crushed their local competition (Infibeam say[1]) with superior execution.
Competition is awesome. Good for us customers. The local bubble is (imo) just a reflection of the global bubble.
[1] Trivia: I was having dinner the other day with an Infibeam ex employee and asked him why FlipKart won so convincingly over his ex employer and he said "FlipKart is run by engineers. Infibeam is run by managers. Why are you surprised?".
How can you say flipkart crushes infibeam? If Google trends is any indicator, they are running neck in neck.
http://trends.google.com/websites?q=Infibeam.com%2C+flipkart...
http://trends.google.com/websites?q=Infibeam.com%2C+flipkart...
I will agree with the author may be on MakeMyTrip, but not on FlipKart. They may be a copy of Amazon. But for India it works very well. They can get US published books in India, in a matter of 10 days or so. Amazon takes some 30 days. I am a big fan and everybody I know also is. They execute super good.
Totally agree on Rediff. It is like Yahoo of India. Difficult to say what it is.
And lastly don't we all know, bubbles are never predicted, but always explained with the benefit of hindsight.
And lastly don't we all know, bubbles are never predicted, but always explained with the benefit of hindsight.
This post http://bechalis.blogspot.com/2011/08/i-dont-care-about-e-com... absolutely nails why the e-commerce scenario is different this time from a customer's point of view. Obviously, it is not at a massive scale yet, but you can see the momentum that is building now.
The valuation maybe over the top, but the fact is that in India we are reaching a stage where expanding into large tracts of our market can't be done on the cheap. And I am not talking about spending on marketing here. Most of us take putting together the logistics and supply chain on a pan-India level as trivial. It is unbelievably hard and that at least some of the new breed of companies are getting it right is a significant differentiator from anything else we have seen so far.
Also, compared to where we are otherwise headed with the ad-based online business in India (which has not shown growth worth speaking about since forever), give me a bubble any day.
The valuation maybe over the top, but the fact is that in India we are reaching a stage where expanding into large tracts of our market can't be done on the cheap. And I am not talking about spending on marketing here. Most of us take putting together the logistics and supply chain on a pan-India level as trivial. It is unbelievably hard and that at least some of the new breed of companies are getting it right is a significant differentiator from anything else we have seen so far.
Also, compared to where we are otherwise headed with the ad-based online business in India (which has not shown growth worth speaking about since forever), give me a bubble any day.
After reading the news, did google search of Indian retail market and online retail market valuation and found following articles:
Retail Market to grow by $900 billion by 2014: Source PwC http://articles.economictimes.indiatimes.com/2011-02-03/news...
Online Retail Market worth 7000 crore INR ($203 million) http://www.commodityonline.com/news/Indias-online-retail-ind...
By looking at this market valuations, availability of good players (Flipkart, Infibeam...) in online retail market and Amazon is coming next year, what are you thoughts?
I fill the valuation is bit more but still fare and not that much high comparing how the company is doing and they have potential to grow. And also market has those many opportunities available.
Retail Market to grow by $900 billion by 2014: Source PwC http://articles.economictimes.indiatimes.com/2011-02-03/news...
Online Retail Market worth 7000 crore INR ($203 million) http://www.commodityonline.com/news/Indias-online-retail-ind...
By looking at this market valuations, availability of good players (Flipkart, Infibeam...) in online retail market and Amazon is coming next year, what are you thoughts?
I fill the valuation is bit more but still fare and not that much high comparing how the company is doing and they have potential to grow. And also market has those many opportunities available.
According to wikipedia, flipkart was funded by founders with Rs 4 lakh and broke even in 2008, I don't understand how it is loss making. It is certainly not worth $1 billion now, but so was facebook when it was funded by MS. I don't think any body would be so stupid in making decisions as described by the author.
there is a huge difference between breaking even to an initial investment and making losses on a day to day basis. Sure they may have recovered their initial investment - but if the difference between their expenses and their income is negative - they are loss making. It's basic economics.
As for comparing flipkart to facebook... I dont really know where to start on that comparison!
As for comparing flipkart to facebook... I dont really know where to start on that comparison!
Once Proper logistics is set up imagine how much profits it can make. because every book sold is minus the show room,lights and other infrastructure costs?