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View Poll Results: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?
Yes 8 25.00%
No 10 31.25%
The valuations may be off but they are here to stay 12 37.50%
Dont know/cant say 2 6.25%
Voters: 32. You may not vote on this poll

 
 
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Old 07-09-11   #31
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?


Reason why online shops are going to stay
1.as rod said there is no middle man.
2.they are getting large number of customers which include customers belonging rural area like me, It is due to online shops i am planing to buy MSI 6850 Cyclone
3. I completely agree that these online shops are oprating at very low margins so will the brick and mortar shop too.go to lamington road or nehru place there are atleast 150-200 shops over there and there is very tough competition between them so these shops are also operating at very low margins but they are still surviving so why we are thinking that online shops will die if they do bussiness with low margins.
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Old 07-09-11   #32
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

Problem in India is distributors play the game with an iron hand.
The market prices are dictated by them and not by dealers.

If companies like flipkart can manage to bypass these middle dalals/distributors, we can get things at even much cheaper prices.

PS:- First hand experience, tried to help a friend setup an online shop. He quit in a month, owing to pathetic attitude and heavy handedness from distributors .
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Old 07-09-11   #33
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

Originally Posted by Rod View Post
Online shopping is still in a nascent stage in India, it is sure to grow with time.
Online shops have an advantage in a way that they procure products directly from Manufacturers thus cutting costs. No middlemen, no wholesalers, no distributors/dealers, etc. So, online shops get a better deal from Manufacturer, which they are able to pass on to the end consumer.

Eg. Letsbuy or Flipkart would get a Refrigerator for 6k, market retail price would be 8k. They would tag it 8k, then say "__%" discount & price 7500k. Plus throw another discount coupon, the price still remains > 6.5k. So both Consumer & shop are gaining from the business.

Also in case of bulk buying, the manufacturer further reduces the procurement price for products for these online shops.

IMO online shopping is going to grow a lot in India, many small shops will come & go but the business as a whole will grow. Those coming in initially will spread their roots.
Thats how it works in US and not in India. Flipkart etc are still buying through distributors only atleast for Computer Hardware, no idea about books and other electronics.
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Old 07-09-11   #34
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

Originally Posted by blufox View Post
PS:- First hand experience, tried to help a friend setup an online shop. He quit in a month, owing to pathetic attitude and heavy handedness from distributors .
I assume by "heavy handedness" you meant that the distributors did not allow him to sell it at a certain price because it will spoil others margins. Well we have had first hand Experience of that here on Erodov itself when some GO's were put up by our forums without any profit. Then our good friend Mr. Amarbir Shing Dhillon used to run to the distributor and complain about our GO's. The distributors would then ask us to close the GO threads or face non supply in the future. My sources tell me that Amarbir kept up this practice of complaining to the distributors even after leaving the forums.

You can still see some of the colorful threads which led to public spats with him in our archives. Amarbir's argument was that we were "Spoiling the distribution channel" by putting prices so low. And I hate to admit but he did have a valid point (although not as dramatically as he put it). We did not have the overheads like him and so we could afford to give things to him at such low prices. However we could not be a substitute for a regular distribution channel or provide RMA services. So we were actually undercutting the retailer who was still required by the distributors.
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Old 07-09-11   #35
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

You can compare the prices of certain product between different online shops within 15 mins but if you go to market to compare prices it takes atleast an hour or two,so comfort is another reason why these online shops going to stay
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Old 07-09-11   #36
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

I don't think anybody works on a loss. Bulk buying or direct buying prices are always lower. Also note most products that are discounted, command those sort of prices in the market, only thing is these online shops make it easy to spot & bring it in the open.

Big online shops themselves act as wholesellers & thus procure directly from the Companies. Similar business model to Walmart, Metro cash & carry, etc. So no sweat..!
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Old 07-09-11   #37
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

Originally Posted by Rod View Post
I don't think anybody works on a loss. Bulk buying or direct buying prices are always lower. Also note most products that are discounted, command those sort of prices in the market, only thing is these online shops make it easy to spot & bring it in the open.

Big online shops themselves act as wholesellers & thus procure directly from the Companies. Similar business model to Walmart, Metro cash & carry, etc. So no sweat..!
As I said earlier, thats how it should be and thats how its elsewhere, logic dictates this way.......

But right now, they are working on a loss on many of the items. Both these companies and a few others have garnered venture capitalist funds, hence they have started promoting and giving discounts to increase their market share. Right now they are doing it in the name of marketing and hence the thread and apprehensions.
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Old 07-09-11   #38
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

Originally Posted by Rod View Post
I don't think anybody works on a loss. Big online shops themselves act as wholesellers & thus procure directly from the Companies. Similar business model to Walmart, Metro cash & carry, etc. So no sweat..!
You will be surprised that a lot of companies especially in the .com field work on a loss. The business model that they follow is is to get good valuations for their share price and then pass the shares onto the next speculative investor. The last one holding the stock gets slaughtered. This is exactly what happened in .com bubble during 19952000. I give you the example of the famous pets.com failure and this is what its Wikipedia page says
Pets.com lacked a workable business plan and lost money on nearly every sale because, even before the cost of advertising, it was selling merchandise for approximately one-third the price it paid to obtain the products. Pets.com tried to build a customer base by offering discounts and free shipping, but it was impossible to turn a profit while absorbing the costs of shipping for heavy bags of cat litter and cans of pet food within a business field whose conventional profit margins are only two to four percent.

The company hoped to shift customers into higher margin purchases, but customer purchasing patterns failed to change and during its second fiscal year the company continued to sell merchandise for approximately 27% less than cost, so the dramatic rise in sales during Pets.com's second fiscal year only hastened the firm's demise.
Indian online sellers dont have the volumes to bypass distributors and many companies wont allow online companies to bypass the distributor or undercut retail prices. If companies do that then they risk being boycotted by retail sellers whithout whom the companies cant survive. (you can see examples of this on Erodov itself) You must understand that online selling is only a small fraction of what "brick-and-mortar" retailers sell in India.
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Old 07-09-11   #39
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

Crap, I clicked on "Yes" by mistake. But no, they are here to stay. Their prices are somewhat similar to the best available white market prices, with regard to electronics at least. Only here you don't have the hassle of searching for those prices on the streets. The discounts may cut their margins buy some amount, but I think they will squeeze out tiny profits on almost all products.

But at the end of they day their business is growing day by day and thats because of the excellent & professional service they provide. At least from now on I know where to buy cell phones. Hope they set an example for all online businesses in our country.
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Old 08-09-11   #40
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

@Vijay, the dynamics of Indian market are very different from American markets. The footing is solid rather than speculative.
Many Online shopping shops are an aggregate of sellers coming under one roof to sell their merchandise. Online shop is just a medium here.

Online shop like Yebhi.com, etc. are themselves wholesellers too. So no sweat..!

Flipkart has done away with discount coupons, move that is not populist. Indicates its will to stay. Letsbuy is relatively new, spreading its roots, instead of spending on outright Advertising, its working through discounts. When its popular, we will see the demise of substantial offers. EBay India used to give great discounts but no more. Why, because its gained polularity now.

Companies want to sell their merchandise, production is huge, competition is immense, they don't mind striking good deals with buyers.
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Old 08-09-11   #41
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

Well, it may very well be the case that they are a profitable enterprise and I too hope that they are a sustainable business and keep up their service.

However I do have some doubts about these. Time will tell if my concerns were justified or not. I will try to keep this thread updated with both good and not-so-good news in the future.

-----------------------

Just a small snippet I found here. Dotcom Bubble 2.0 in the works as E-retailers cook up profits-ITeS-Tech-The Economic Times on Mobile

VIOLATION OF OWNERSHIP RULES BY FLIPKART

The second issue relates to ownership rules. In the way its operations are structured, Flipkart may be violating the foreign direct investment rules (FDI) for retailers; some other e-commerce players might also be doing so.

Flipkart's operations are organised under two entities: Flipkart Online Retail Services Private Limited and WS Retail Services Private Limited. Although Flipkart Online tags the name of its website, it works only as a wholesale distributor, selling to WS Retail. When a customer orders, say, books from flipkart.com, WS Retail makes the sale.

The current rules for multi-brand retailers, offline and online, disallow them from having any FDI. However, in wholesale trade, 100% FDI is allowed, but with a rider: the wholesale company cannot make more than 25% of its sales to a group company. Flipkart Online - which has FDI from two Mauritius-based PE firms, Tiger Global and Accel Partners - slots in as a wholesale company. This means its sales to WS Retail cannot exceed 25%.

However, the 2009-10 annual reports of the two companies show this condition is not met. In 2009-10, 8.1 crore of the 11.6 crore sales of Flipkart Online - or 70% - were to WS Retail. This share might have been higher, but for the fact that Flipkart Online did retail sales for four months till July 2009. When asked by ET whether Flipkart violated foreign ownership norms, Sachin Bansal, the company's co-founder, said: "From our perspective, we comply with all guidelines."
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Old 16-09-11   #42
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

guys a lil OT here.. anyone got any coupons for Lets buy??
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Old 16-09-11   #43
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Re: Are Letsbuy and Flipkart Just Bubbles Waiting to Burst?

Originally Posted by JD666 View Post
guys a lil OT here.. anyone got any coupons for Lets buy??
see this thread
use this couponRCOMLB1 or AMEXLB, its 10% off, max 1k
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