Justeat’s reaction on FDI in ecommerce
Quote from Founder/CEO Ritesh Dwivedy on FDI in e-commerce:
Ecommerce in India has grown at a compounded annual growth rate of 30% since 2009, and is expected to be $18 billion by 2015. With the new government proposing FDI in the ecommerce space, we believe that ecommerce in India would receive a further boost, helping revive the economy at a faster pace than the present 5%.
Ecommerce companies are facing some challenges nowadays. While it is easy for them to receive Series A and B funding, most of them face a cash crunch when it comes to Series C funding which may hurt in scaling of operations. With FDI in place, ecommerce companies will be able to raise foreign funding and expand operations.
We have around 200 million internet users in India, and are expected to have about 185 mobile internet users by June this year. However, actual broadband penetration is still abysmal, at less than 20 million. Most of the ecommerce companies are not profitable at the moment and will need some time before they break even. FDI will only improve their capital infusion and help in sustaining their business.
In the short term, the disadvantage that we see is the impact that FDI may have on mom and pop stores. This has to be compared with the additional jobs that will be created in logistics, greater employment opportunities in ecommerce companies, and disposable incomes that will lead to greater purchasing power of the consumer.
Overall, we believe that it will be a very positive move.
