While everyone is overwhelmed by the discounts and offers given by e-commerce platforms, there is a growing concern among people in the industry that this price competitiveness is coming due to venture capital (VC) money which might be used to offer unimaginable discounts on the purchase price. It leads to the question whether or not offering such low cost prices is a sustainable business model.
In Suresh Kabra’s opinion, Founder of Delhi-based PriceMap, wholesalers and retailers have adopted the marketplace model wherein they are the actual sellers. In reality, the merchandise stays under the individual seller’s name, until the transaction is completed; while the marketplace provides support in terms of warehouse, delivery and payment collection. Kabra believes that in the long run physical retailers will be able to offer more competitive pricing than marketplaces or other small e-commerce players, who ideally after a certain point of time, will start charging a premium.