5 {Easy} strategy to {Build} the {E-Commerce}

MARKETPEDIA      E-commerce: Time to build muscle through strategic purchases or alliances Even before the COVID-19 pandemic, one could see the consolidation trends playing out in the e-commerce space.  With VCs more cautious in handing out big cheques learnt through the perilous journey of high-profile valuations being humbled when attempting to go public, along with a shift in approach from 'growth-at-all-costs' funding to increased focus on unit economics and path to profitability.   The M&A trend has accelerated and brought to the forefront because of the pandemic, with Indian small/niche startups struggling to stay afloat in these testing times.   By some estimates over 25-30% of them might not make it due to a complete halt in operations, increase in competition, limited cash runway.   A pattern is emerging where leaders of the pack along with the key players in the chase are seeking strategic purchases or alliances to become a more dominant force in the space making them more attractive to both VCs and consumers.   There is substantial value to be unlocked when a collaboration/acquisition is done right - helping speed up growth, improving margins, access to bigger markets and shorten the sprint to profitability.        There are several factors influencing this accelerated trend brought about both by caution in investors and high-growth companies leaping to a higher plane.            1.Narrowing the field of competitors Younger startups, especially in high-growth areas will, in today's environment, may find it challenging to enjoy the enviable valuations of their older peers.    In a hyper-competitive environment and in a natural order of things, peers in the space may have complementary strengths and weaknesses.   Exploring synergies, easing the burden and the potential for a better performance, entrepreneurs can explore innovative ways to stay relevant, improve market performance or better yet reach profitability.       2.Be the disruptor (to break apart) Technologies are vulnerable to disruption, evolution, and competition has been one of the Internet’s defining successes. Increasingly, the focus post acquiring a bigger piece of the pie in terms of market share, companies are focusing on acquiring technologies, to stay ahead of the curve in terms of disruption.  We have witnessed companies strengthening their foundation with the latest technologies to attract customers (AR/VR) and maintain VC interest by displaying an "on-trend" approach.   This will also help bring in scarce talent to the ranks, apart from a boost in capabilities.       3.Ramp up (increase the level or amount of something sharply) Acquisitions can help escalate the pace of adoption in the market - from a domestic perspective or international players looking to expand their footprint in India or Indian players expanding overseas.   The interesting trend here is, it bodes well that it is not only larger businesses that are acquiring startups, there are other smaller players are identifying alliances or acquisition opportunities to bring better value add to their offerings. Leveraging the combined pool of customers, partners, suppliers, etc. could open-up new avenues of revenues which the combined entity could take advantage of.   4.Excess Baggage (luggage weighing more than the limit allowed on an aircraft and liable to an extra charge) Some companies on the back of enormous investments have navigated into segments not core to their business. Companies can unlock capital by losing the excess baggage to a better suitor.   While it is good for companies to diversify, the key will be for businesses to focus on the revenue-churners. For the opportune, it may be a right time to look for suitable acquisition and bolster their offerings at a bargain.   5.The need to pivot (the need to turn) Pivoting occurs when the entrepreneur shifts the direction to accommodate changes, and the current environment is bringing about a sea of change in consumer behaviour.    Pivoting can comprise anything from shifting targets to another set of customers, re-purpose existing offerings, deploying different technologies for building products.   Finding the right acquisition target can help quickly bring to life the new vision and direction. We have already witnessed several companies venture into categories traditionally not in their field of play.                                           Conclusion While a lot of founders may be hesitant towards M&A, finding right synergies, change management, proper planning and execution can increase chances of success and can lead to significant shareholder value. A time like this provides some interesting opportunities to expand markets, improve offerings, and provide new innovations.