How can e-commerce sustain with a huge loss?
Success in the eCommerce business is about getting customers and retaining them. This can only be achieved with discounts, giveaways, etc when the competition on that space too intense. This means eventually the eCommerce rat race will end and the game will shift to 2–3 players.
This has happened in the retail business as well. Let’s take the case of soft drinks. Initially, Coke and Pepsi had a tough fight with 1000s of other soft drinks. It was said almost every month a new soft drink was introduced. Eventually, these brands gave up. Some closed down, while a few were sold out. Now, the soft drinks market is with these two giants.
I believe the same will happen to the eCommerce business as well. The game will end with 2–3 players getting 90% of the pie. Only, those small guys who have a very diverse catalog will stay afloat. Not because they cannot be crushed, but either because the giants do not think that the space is profitable or they do not have the expertise and time to enter that space. Haven’t we seen this in the last decade with Google taking the whole pie from Yahoo, AOL, Excite, Lycos, etc?