MUMBAI: While online retailers would continue to provide stiff competition to their physical counterparts, global financial service firm Jefferies said the pace of discounting by online players are likely to ease off as they start focussing on profitability and consolidation. Discounting has been one of the key drivers for adoption of online retail by consumers.
“We have already started to witness consolidation in the online retail space and we believe that only a few online retailers will ultimately survive. Consolidation will prove to be beneficial for the entire retail industry, as it will reduce the likelihood of incessant cash burn by way of discounting and impacting the physical retailers in return,” Jefferies said.
E-commerce major Flipkart acquired Myntra and Jabong to increase its presence in online apparel retail. Local Baniya, an online grocery retailer had to wind up as it was unable to crack the right profitable business model while Fabfurnish, a furniture e-tailer was acquired by Future Group, but was shut down later.
While noting that neither pure play online players nor pure play offline players have made money over the last few years, it said the way forward for retail players is to be present in all channels of trade.
