By Jason Overdorf
The Washington Times (March 2016)
NEW DELHI, India — Every morning Manzar Imam buckles his helmet and straps on a backpack that’s almost as big as a washing machine, girding for the battle ahead.
The 45-year-old is a kind of modern-day gladiator, one of tens of thousands of “last-mile” motorbike deliverymen in India’s cutthroat and chaotic e-commerce industry.
Zigzagging through New Delhi’s testosterone-infused traffic on his 100cc Hero Honda motorcycle, he ferries clothes, electronics and household goods to homes and offices around the city, the last — and indispensable — link in a global chain of mostly Internet-directed commerce.
It’s not an easy job.
“It depends on the customer’s mood,” said Mr. Imam, a potbellied man with long sideburns and a bushy salt-and-pepper mustache. “Some customers are very angry.”
Delivery calls can be truly dangerous in India. Tales abound in the Indian press of couriers assaulted, even locked in bathrooms, over trivial disputes such as not being able to make change for an order. In Indiacash on delivery is common, which brings its own dangers for couriers.
Last month, two former Amazon deliverymen allegedly ordered a hair trimmer online, then beat up the motorcyclist who delivered it and stole his cellphone and 23 packages intended for other customers, according to Hyderabad police.
Last year a story went viral in the Indian media about armed robbers who stole three MacBooks from a Flipkart delivery boy in Uttar Pradesh, luring him to peril by giving him an address that turned out to be a field in the middle of nowhere.
Even so, in a nation where Internet startups are legion and e-commerce is booming, the streets of India’s capital teem with delivery vans and motorcycles.
Local would-be Amazon.coms and eBay-style online marketplace companies attracted more than $500 million in investments over the first three months of 2016 in India, according to startup tracker Trak.in. Flipkart is one of the Indian sector’s four “unicorns” valued at more than $1 billion. In 2014 Amazon announced plans to invest $2 billion to expand its India operations.
A recent Goldman Sachs forecast predicts that India’s e-commerce sector, already one of the largest in the world, will triple from an estimated $23 billion to $69 billion by 2020.
India’s PayTM, which entered the e-commerce sphere in 2014, sold $2.5 billion worth of merchandise last year, not including discounts and returns, according to founder Vijay Shekhar Sharma. This year he projects that the company will surpass $10 billion in sales — the same amount targeted by Amazon and Flipkart.
Sustainability doubts
Much of that money is flowing back to customers in the form of deep discounts and unsustainable perks, including free or discounted delivery, cash on delivery and free returns, in a bid to expand and attract new orders. Companies are slashing prices to gain market share and scare off competitors. It’s not uncommon for some sites to sell products at a 20 percent discount to wholesale prices, leading some to predict a reckoning in the months to come.
“I think that Indian e-commerce is near the peak of an investment bubble,” said Porter Erisman, a tech entrepreneur who wrote a book about his experience as an executive in the early days of massive Chinese e-commerce website Alibaba.com. “The rush of money has led to a lot of e-commerce companies chasing market share at all costs.”
Some companies are riding the wave. Online retailer Infibeam — which posted its first profits in 2014 — has pegged its value at $334 million as it readies its first public stock offering of an Indian e-commerce company on March 21. Former Amazon executive Vishal Mehta founded Infibeam in Ahmedabad in 2007.
Some companies are indulging in bubblelike behavior. Online clothing retailer Jabong.com hired writers and launched a fashion magazine with a print run of nearly 200,000 copies — copies that were never distributed. “They were just lying around,” said Sharin Bhatti Nair, a former staff writer for the magazine who now runs a co-working space for entrepreneurs in Mumbai.
Another shadow over the industry is being cast by Indian states looking to capture some of the revenues as Web-based sales boom.
The Mumbai-based Economic Times reported this week that three states — Uttarakhand, Bihar and Assam — have imposed an “entry tax” on goods purchased online from outside their borders, and more states are looking to follow suit. E-sellers complain this amounts to a double sales tax on their goods and could leave them uncompetitive against traditional brick-and-mortar retailers.
“The practice smacks of some kind of predatory tax regime which is being promoted by some states,” Subho Ray, president of the Internet and Mobile Association of India, told the newspaper.
Fraud is also increasingly commonplace on Indian e-marketplaces too, said a former investor with a major firm that worked with Indian startups. Mobile phone peddlers can hock high-value phones to relatives or accomplices to score incentives again and again for reselling the same item, for example, he said, under most vendor arrangements.
“The burn rates were very high and continue to be high,” said the investor. “We’ve heard numbers as high as $1 million a day being burned.”
Couriers like Mr. Imam feel the brunt of the companies’ unsustainable choices, as customers complain and pressures mount.
Jabong.com offers free delivery and free returns on items that cost less than $5, according to the company’s website. Customers often return delivered items, take store credit and then buy something else online for delivery the next day with that credit. As a result, couriers repeatedly visit the same house to bring products paid for with the same store credit many times over.
The companies most exposed to the unsustainable business models won’t survive when the bubble bursts, said Mr. Erisman, who was an executive at Alibaba in the early 2000s.
“The same thing happened in the early days of China’s e-commerce boom,” he said. “I would advise the heads of e-commerce companies inIndia to focus on saving the money they raised and prepare for winter.”
NEW DELHI, India — Every morning Manzar Imam buckles his helmet and straps on a backpack that’s almost as big as a washing machine, girding for the battle ahead.
The 45-year-old is a kind of modern-day gladiator, one of tens of thousands of “last-mile” motorbike deliverymen in India’s cutthroat and chaotic e-commerce industry.
Zigzagging through New Delhi’s testosterone-infused traffic on his 100cc Hero Honda motorcycle, he ferries clothes, electronics and household goods to homes and offices around the city, the last — and indispensable — link in a global chain of mostly Internet-directed commerce.
It’s not an easy job.
“It depends on the customer’s mood,” said Mr. Imam, a potbellied man with long sideburns and a bushy salt-and-pepper mustache. “Some customers are very angry.”
Delivery calls can be truly dangerous in India. Tales abound in the Indian press of couriers assaulted, even locked in bathrooms, over trivial disputes such as not being able to make change for an order. In Indiacash on delivery is common, which brings its own dangers for couriers.
Last month, two former Amazon deliverymen allegedly ordered a hair trimmer online, then beat up the motorcyclist who delivered it and stole his cellphone and 23 packages intended for other customers, according to Hyderabad police.
Last year a story went viral in the Indian media about armed robbers who stole three MacBooks from a Flipkart delivery boy in Uttar Pradesh, luring him to peril by giving him an address that turned out to be a field in the middle of nowhere.
Even so, in a nation where Internet startups are legion and e-commerce is booming, the streets of India’s capital teem with delivery vans and motorcycles.
Local would-be Amazon.coms and eBay-style online marketplace companies attracted more than $500 million in investments over the first three months of 2016 in India, according to startup tracker Trak.in. Flipkart is one of the Indian sector’s four “unicorns” valued at more than $1 billion. In 2014 Amazon announced plans to invest $2 billion to expand its India operations.
A recent Goldman Sachs forecast predicts that India’s e-commerce sector, already one of the largest in the world, will triple from an estimated $23 billion to $69 billion by 2020.
India’s PayTM, which entered the e-commerce sphere in 2014, sold $2.5 billion worth of merchandise last year, not including discounts and returns, according to founder Vijay Shekhar Sharma. This year he projects that the company will surpass $10 billion in sales — the same amount targeted by Amazon and Flipkart.
Sustainability doubts
Much of that money is flowing back to customers in the form of deep discounts and unsustainable perks, including free or discounted delivery, cash on delivery and free returns, in a bid to expand and attract new orders. Companies are slashing prices to gain market share and scare off competitors. It’s not uncommon for some sites to sell products at a 20 percent discount to wholesale prices, leading some to predict a reckoning in the months to come.
“I think that Indian e-commerce is near the peak of an investment bubble,” said Porter Erisman, a tech entrepreneur who wrote a book about his experience as an executive in the early days of massive Chinese e-commerce website Alibaba.com. “The rush of money has led to a lot of e-commerce companies chasing market share at all costs.”
Some companies are riding the wave. Online retailer Infibeam — which posted its first profits in 2014 — has pegged its value at $334 million as it readies its first public stock offering of an Indian e-commerce company on March 21. Former Amazon executive Vishal Mehta founded Infibeam in Ahmedabad in 2007.
Some companies are indulging in bubblelike behavior. Online clothing retailer Jabong.com hired writers and launched a fashion magazine with a print run of nearly 200,000 copies — copies that were never distributed. “They were just lying around,” said Sharin Bhatti Nair, a former staff writer for the magazine who now runs a co-working space for entrepreneurs in Mumbai.
Another shadow over the industry is being cast by Indian states looking to capture some of the revenues as Web-based sales boom.
The Mumbai-based Economic Times reported this week that three states — Uttarakhand, Bihar and Assam — have imposed an “entry tax” on goods purchased online from outside their borders, and more states are looking to follow suit. E-sellers complain this amounts to a double sales tax on their goods and could leave them uncompetitive against traditional brick-and-mortar retailers.
“The practice smacks of some kind of predatory tax regime which is being promoted by some states,” Subho Ray, president of the Internet and Mobile Association of India, told the newspaper.
Fraud is also increasingly commonplace on Indian e-marketplaces too, said a former investor with a major firm that worked with Indian startups. Mobile phone peddlers can hock high-value phones to relatives or accomplices to score incentives again and again for reselling the same item, for example, he said, under most vendor arrangements.
“The burn rates were very high and continue to be high,” said the investor. “We’ve heard numbers as high as $1 million a day being burned.”
Couriers like Mr. Imam feel the brunt of the companies’ unsustainable choices, as customers complain and pressures mount.
Jabong.com offers free delivery and free returns on items that cost less than $5, according to the company’s website. Customers often return delivered items, take store credit and then buy something else online for delivery the next day with that credit. As a result, couriers repeatedly visit the same house to bring products paid for with the same store credit many times over.
The companies most exposed to the unsustainable business models won’t survive when the bubble bursts, said Mr. Erisman, who was an executive at Alibaba in the early 2000s.
“The same thing happened in the early days of China’s e-commerce boom,” he said. “I would advise the heads of e-commerce companies inIndia to focus on saving the money they raised and prepare for winter.”