Financial Sustainability of Indian E-Commerce Businesses: A Cost-Benefit Analysis
Author(s): Dr Suraksha Sharma
Publication #: 2504046
Date of Publication: 10.01.2016
Country: India
Pages: 1-8
Published In: Volume 2 Issue 1 January-2016
DOI: https://doi.org/10.5281/zenodo.15223055
Abstract
This paper examines the financial sustainability of Indian e-commerce businesses from 2011 to 2015, focusing on a cost-benefit analysis that highlights the challenges and opportunities within the sector. The study explores the rapid growth of e-commerce, fueled by substantial investments, and investigates the associated financial pressures. Key findings include the dominant role of logistics, customer acquisition, and technology infrastructure in driving costs. Despite the influx of over $9 billion in investments, many firms struggled to achieve profitability due to high burn rates, heavy discounting, and operational inefficiencies. The paper analyzes the funding patterns, cost structures, and the long-term viability of firms in a competitive market. The research further identifies critical financial challenges such as negative margins, unsustainable cash flows, and the need for strategic shifts towards operational efficiency. The study suggests that for sustained growth, Indian e-commerce companies must focus on improving unit economics, reducing dependency on external funding, and optimizing supply chains. This paper concludes by offering strategic recommendations for e-commerce firms, policymakers, and investors to foster a financially sustainable environment within the rapidly evolving e-commerce landscape of India.
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