Shopclues - E-Commerce startup
I read in BS today that Shopclues, an Indian e-commerce venture, made Rs.100 crores loss on a revenue of Rs.79 Crores. How can a company make more losses than revenues in a year? Are they giving away money with their products to their buyers? more
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Vinay Joshi .... first of all it is said that gentlemen do not use abbreviations or short forms when they communicate, their communication is clear and most simple using simple words. So with your comment and abbreviations like M&A I can make out that you are not a gentleman. Now coming to the context... looking at your post it seems that VC's are fool of the fools who are investing money to fund Rs. 100 crore on a sale of 75 Crores anticipating a return in 8 years. Now give me one ... only one example where a VC has invested 75 crore and got worthy returns in 8 years. And the last IIM is operational since last 52 years generating a talent pool of 3000 students per year but there are only 26000 companies listed on stock exchange(s). do the math. more
Jan 30
Generally investors in a start up considers 3-4 years as a gestation period for any start up. Losses bound to happen for those years. However, if after those years also the company incurs losses then they consider something is wrong and we should not stay invested in the same. more
Jan 30
Mr. Hari, This may sound interesting to you but this is very common with the companies which take VC money. The money that they are loosing is not their own but VC's money. Most of these big companies would become making profits only after 2024. Surprised ? The valuation of the company is always based on future cashflow. The valuations are pretty crazy at this point in time. But if you look at the market potential the valuation doesn't look very stretched. In order to achieve their growth targets, they would need to get more customers and show the traction to their investors. Because of the excess cash that they have, companies are adopting interesting ways to acquire the customers. One of the tactics is giving huge discounts , free delivery etc. This definitely results in operating losses. They are also trying to acquire talents by giving excellent packages to IIT/IIM grads. Another issue is our infrastructure. It is very poor at this point in time. This also increases their expenses. Anyways, this trend would continue for some more time especially in eComm space before M&A kicks in. Regards, Vinay more
Jan 30
Shopclues, flipkart, snapdeal, zomato, pepperfry are common names which are heard by us but none of them are making money. Its all valuation game, in order to understand more you can mail me on my mail id. Incidently in the initial years flipkart was despatching a 25 rupee book free whereas it was paying 200 rs on courier charges. more
Jan 27
Only solution is for common folks like us to stop investing in stock market. I have gotten rid of all of my shares etc. When the stock market become devoid of retail investors like us, then all these games of valuation and market penetration will stop. more
Jan 27
