'Innovators are positive people and they see a solution for every problem. People who want to look at the status quo and just make money, will look at problem in every solution.'
'You have an entrepreneurial prime minister in (Narendra) Modi and he is going to do everything he can to make this country a thriving economy.'
'Compared to many other countries, e-commerce in India is still in its infancy. Human behaviour in a country like the US has completely changed. India has a long way to go. It is only the beginning.'
Kal Raman (bottom left), the CEO of Solutionstar is arguably one of the authorities in the field of online retail. He worked as the senior vice president of marketing and retail technology under Jeff Bezos at Amazon. Under him as the COO of Groupon, the stock price of the company went up 41 per cent and its revenue grew to $1.9 billion. As the CEO and CTO of Drugstore, he took its net sales to $84.3 million in its first five years.
No wonder, in February he was inducted into the Board of Directors of the Texas based Big Commerce, that provides e-commerce software to retailers and merchants.
Who is better qualified to talk about the fast growing e-commerce sector in India than Kal Raman?
He spoke to Shobha Warrier/Rediff.com via Skype on how the Indian e-commerce market is going to grow in the next 5-10 years.
According to a report published a couple of months ago, the e-commerce market in India is expected to grow at 37 per cent from $11bn to $20 bn this year. What are are the reasons behind this exponential growth?
Retail is a simple business and it is all about selection, price and convenience. Consumers want larger selection, lower prices and the product to be delivered at home. E-commerce fundamentally provides the foundation for that. You need only limited shelf space but provide a larger selection. It does not need the kind of infrastructure and human presence that you require for a physical store. It can offer lower prices too.
In India, a large section of people are now connected to Internet through mobile phones and PCs, so consumers can easily find what they want.
Twenty years from now, nobody in India or the US or any other part of the world, would go for small selection and high price. This will stand the test of time.
The reason why it is going to grow so fast in India is because of the expanding middle class population who have more money than time. These are the people who do not want to spend time looking for a product; they want to do it the fastest and easiest way. When you also have technology available, it is not surprising that the e-commerce market in India is set to grow at 37 per cent. I would say, it will further accelerate in 2016.
How excited are you about the kind of growth expected in India?
There are a lot of great companies in India, in fact, I am an investor in one of the companies - Infibeam built by Vishal Mehta, a former Amazon guy, based out of Ahmedabad. Infibeam is now planning to go public.
Then, you have amazon.com here. Everybody knows Jeff is a visionary and if he is willing to invest $2 billion in India, that says a lot about the market.
Then, of course, you have Flipkart, Snapdeal and many such success stories.
It is known to all that you were the one who guided and advised the Flipkart founders to start an online store when they came to meet you as budding entrepreneurs…
I do not want to take any credit for their success. At that time, I was the senior vice president with Amazon and these two were young men. Guided is an unfair term to use because they deserve their success.
You gave them the initial spark…
I just told them, if you want to be entrepreneurs, don’t look for any new idea. You can replicate what Amazon has done in the US. It is a big business as long as you remain patient. Probably, it must have been a 15 second conversation. So there is nothing more or nothing less to the meeting. In fact, I didn’t even remember their faces.
The only guy I guided, though it is a strong word, is Vishal Mehta of Infibeam. I invested in the company in 2005, and I have been an advisor for 10 years.
What do you attribute the success of Flipkart, Snapdeal, etc? They take on a giant like Amazon so well...
These guys have worked really well and they are smart people. They have done the right thing for the customers. The market conditions in India, which everybody knew, are going to facilitate their growth further. The average age of the population is 27 years, there is more and more expendable income, lakhs of mobile phone are getting sold every year, people upgrade their phones once a year, everybody is connected to technology.
For the last 5 years, everybody knew this was going to happen.
And these entrepreneurs worked hard in assembling a great team with the long term goal of building an enterprise, and they took on some big guys. You need to give them credit for that. They have been entrepreneurial and took great risks. None of this is unanticipated. Few of them are standing out because they have been patient.
Do you see more such success stories coming out of India?
Of course. It’s a huge market. Even if you take all these names together, it is only a small piece of this market. I think the best days of these companies are yet to come.
Do you feel the eco system in India has to improve for many more companies to taste success?
That is the beauty of innovation. Innovators are positive people and they see a solution for every problem. People who want to look at the status quo and just make money, will look at problem in every solution.
You have a fantastic government and the economy is poised for growth. Though many may not like the Budget, many ideas in it will play along.
The road may be bumpy but I expect better days for e-commerce in India. Between 2016 and 2020, you will see bigger things than what you see this year.
With the government earmarking crores of rupees exclusively for start-ups, do you see another Silicon Valley happening here?
That will be taking it too far. One year’s budget will not take you there. It is just a beginning. Silicon Valley has been there for 40-50 years. It takes consistent investment, consistent focus to reach there. It is definitely a great start. You have an entrepreneurial prime minister in Modi and he is going to do everything he can to make this country a thriving economy.
All the entrepreneurs I spoke to say, this is the best time to be in India. Do you think the Budget will kick-start the entrepreneurial spirit in India?
The Budget is not going to drive it, it is going to act as a catalyst. Entrepreneurship in India is already kick-started, before any politician or government did anything. It is in the right direction.
What is the most exciting thing that has happened in the e-commerce space?
What I love the most is the way these guys are delivering products without a proper logistical infrastructure in India. The speed at which and the efficiency with which they deliver products is very good and thoughtful. It is very heartening to see it.
How do you compare the e-commerce market in India with that of other countries?
Compared to many other countries, e-commerce in India is still in its infancy. Human behaviour in a country like the US has completely changed. India has a long way to go. It is only the beginning.
It is reported that online travel constituted 71 per cent of e-commerce in India while e-tail is only 16 per cent. Do you expect it to grow in the same pattern, or do you see any change?
In 5 years’ time, retail and travel would be equal. That’s my guess. Today, travel holds the major share because of train and bus tickets. By 2020, I feel whatever be the e-commerce market, half of it will be e-tailing.
Do you think Indians are quite conservative as far as e-tail is concerned?
It takes time. In 2001, in the US, e-tail was just one and a half per cent of total retail and people thought it would not grow. But today, e-tail is 15-20 per cent of total retail. It took these many years for the market to adapt to e-tail.
But the valuations of the e-commerce companies in India, I feel are quite high. They are getting valued for the potential and it is really huge.
Do you think e-commerce is going to attract investment, or the Make in India campaign started by Narendra Modi?
What Mr Modi is doing is going to have a bigger and longer term impact on the way India is perceived by the international world. He is acting like a true Chief Executive Officer of a very young company. Manufacturing sector, infrastructure policies and the Budget are making everybody look at India with extreme serious attention.
Where do you see India in the next decade or so?
There is no doubt about the fact that we are going to be among the top three economies in the world. Nobody can stop India from being a super power.
Is it because we have so many young people in this country?
The number of people, the average age and the smartness of the people, willingness to work hard and the fundamental culture of working, will work in our favour though we have this way of underestimating our own people. But our ethics are great; we are honest, resilient, god-fearing people.
The next ten years are going to be our time! It is like a cycle.
So, is it going to be Asia that is going to dominate the world?
That is what everybody across the world believes.