Nobody saw it coming. Nobody wanted to. It was, after all, the summer of 1999. The spirit of the times was heady and a thousand entrepreneurs had bloomed. Fabmart and Firstandsecond.com wanted to be the Amazon — the giant book store — of India. Rediff was selling knick-knacks on its e-commerce channel. Sify too had joined the bandwagon. Apnaloan was promising to ‘sell’ loans online. Shaadi.com wanted to find your dream “other”. And then on April 4, 2000, Nasdaq crashed.
K. Vaitheeswaran, the CEO of Indiaplaza, remembers the moment vividly. Many venture funds of that vintage perished. Entrepreneurs were worse off. “There were almost 1,000 e-commerce businesses in India at that time. All of them closed down,” says Vaitheeswaran. In the space of six months, ‘dotcom’ had gone from meaning ‘hip, cool; inheritors’ to ‘naïve, paper tigers; lambs to the slaughter’. Hell had frozen over. But so much chaos, so much life had been unleashed.
Could something have survived — spirit, derring-do — the carnage?
Kapadvanj, a small settlement of 50,000 people, is an hour’s drive from Ahmedabad. It hasn’t changed much in the last 10 years. Yes, there are a few more cars and thanks to DTH and pay-per-view, the latest movies get screened much faster, but life moves at an easy pace. Of course, the Internet connection is much more reliable. And Rinkal Shah is all grown up now.
This 26-year-old Web designer’s house in Triveni Park has all the things you would find in a modern house: LCD TV, DTH set top box, laptop, refrigerator and of course Shah’s favourite, Nikon D5000 digital SLR.
Shah bought all these things without setting foot inside an electronics store. He just ordered all of it online. All put together, it must have cost at least Rs. 2 lakh. “I get most of the products on the fourth or fifth day after ordering, at prices lower than physical stores. Free home delivery is a given. And the products are always box packed unlike physical stores like Croma, which have offered me products in open boxes saying it was their ‘last piece’,” says Shah.
In the age of the ever ubiquitous World Wide Web it is hard to shock people, but when a 26-year-old guy in a small town starts buying stuff worth a couple of lakhs without touching the products or without asking the salesman 101 questions, it is time to ask oneself what Marvin Gaye, the singer, asked: “What’s going on?”.
Hitesh Dhingra, the founder and CEO of Letsbuy.com, the online store from where Shah bought his Nikon D500, would simply say: “e-commerce” is what’s going on. Dhingra started Letsbuy in 2009, quitting his job at Tyroo, a digital advertising firm.
By December 2010, Dhingra was selling between Rs. 75 lakh and Rs. 1 crore of electronics every month, causing three venture capital firms to invest $6 million into his company. Today, sitting in his three-storey building off Aurobindo Marg in Delhi, Dhingra says his site has grown to 10 times over the last six months and expects to be doing monthly sales of Rs. 25 crore by December this year. If you thought that was fast, wait till you hear Dhingra’s ambition: Rs. 2,000 crore in revenue over the next three years.
Where honeybees go, the bears follow. Led by an aggressive charge from a New York-based investment fund, Tiger Global, venture capitalists are virtually stampeding to invest in e-commerce startups. Publicly, they have invested nearly $140 million into these companies in just the last six months, compared with just $48 million in all of 2010. Add deals that haven’t yet been reported or are close to being signed, and the number shoots northward of $200 million. Suvir Sujan, partner, Nexus Venture Partners and former co-founder of Baazee, says: “If not two, we must have met at least one e-commerce entrepreneur a day in the last six months who are looking for financing.”
Entrepreneurs and investors had stopped thinking really big over the last decade, says Rajesh Reddy, the founder and CEO of July Systems, a mobile solutions company based in Bangalore. “But big-sized ambitions — ‘hyper growth’ — is back today!” he adds. Reddy is also one of those few entrepreneurs who have been doggedly managing and growing online businesses in India during the last decade.
In the last 10 years, China has created giant e-commerce companies like 360buy, TaoBao and Tencent. Russia has Yandex and Mail. Brazil has Mercado Libre and BuscaPé. And these companies came about because funding sources in these geographies did not dry up the way they did in India. Indian e-commerce is playing catch up.
So, could something have survived the carnage of 2000? It sure looks like the spirit of e-commerce has shot through a wormhole and appeared in a different place and time: Bigger and hopefully better than before.
Editor's Note: This article was originally published by Forbes, here, and is licenced as Public Domain under Creative Commons. See Creative Commons - Attribution Licence.