E-commerce sites in India have made a big dent in few product categories like books & electronics by offering lower prices to consumers. The logic behind being able to offer lower prices is that they do not have the high cost that brick-and-mortar businesses have.
Given that they have build big customer bases especially of the high spending so-called upwardly mobile customers, the e-com sites must be raking in tons of money and be highly profitable (low cost & high sales)
However, is this really the truth? Even the biggies & oldies of the e-com in India – Flipkart, Snapdeal, etc. are still not making profits, in fact they are surviving on continued capital investments. Only thing they are doing is managing to drive players with small pockets out of business by their predatory pricing.
I am all in for competitive market with a lean supply-chain and cutting out the fab in the factory/farm to home supply-chain, however at what cost? What happens once all competition is out of business? Should companies be allowed to do business at a loss on purpose?