E-commerce has become a major part of our lives, and yet it is poised for an even greater growth. The current market has products & services to fulfill any need. We can buy groceries, purchase property and even publish & sell books online.It was a result of initial investors realising the potential of e-commerce in India and how quickly it could be a part of our daily lives. Therefore a lot of e-commerce startups are continuously receiving investment from investors. However, is there any scope for investments in startups not related to e-commerce? Here we to try to understand the differences between getting investment for an e-commerce and a non-e-commerce idea.
The Factors Behind An Investment:
The first thing which we need to understand is the factors behind someone investing in your idea. There are a lot of factors behind receiving an investment, such as:
- Market Size: Size and strength of the market. Are the people willing to spend to on your offering?
- Scope for Growth: How much and how quickly can your idea grow.
- Team Capability: If the team can execute their ideas.
- Action Towards Goal: Investors will be willing to invest if you have strong action plans.
- The Right Fit: Not everyone invests in every idea. Therefore, you have to ensure that you approach the right investor for your idea.
- Connect With Market: The most important factor is how quickly the product or service connects with the audience. As a result, you should have a strong marketing plan for presenting the product/service in a way that appeals to users.
Difference In Funding :
There was a record growth of 62% increase in investments for non-e-commerce companies in 2015. Despite such fantastic numbers, there was a difference of $107 million between e-commerce funding and non-e-commerce funding. At the end of 2016, there were already 36 investment and funding deals in place which were worth $5.6 billion. This shows the level of interest towards e-commerce.
Advantages of E-Commerce
To understand the gap between e-commerce and non e-commerce ideas, let us understand what makes e-commerce so attractive for investors. The advantages of e-commerce are described below.
- Easy accessibility: The best part about e-commerce is that it is more accessible. The store is available through an internet connection.
- Easy to use: Any e-commerce product or service is available in a few clicks. It does not take effort and is, therefore, easier to use.
- No Boundaries: E-commerce has no boundaries. A user can buy a product/service from one location and have it delivered in another area.
- Easier to Receive: Receiving the product/service is hassle free.
- Easier for the user to chose: The user finds all his options within a website. Therefore, it is easier for them to chose what they want to purchase.
- Continuously available: A physical store has timings. An e-commerce store is continuously open and the users can use it at any time or any day of the week.
Preference for Investors:
As you can see, e-commerce gives the users many advantages over a traditional store. This is why it is more appealing to investors. Many research and analytics firms have reported that India will show the fastest growth in e-commerce use. Investors know this and therefore an e-commerce firm has a higher chance of getting funded. A common criticism against e-commerce is that India does not have as many internet users as foreign countries do. However, investors are well aware that India’s internet connectivity is increasing rapidly. Hence, e-commerce firms will surely reach out to more people in the next few years. The present is strong and the future is extremely exciting. As a result, investors have a very strong interest in investing in e-commerce ideas.
At the end of the day, you need to have a strong idea and show that you can take it to its full potential. However, it is very clear that e-commerce startups have a much greater chance of getting funded than those which are non-e-commerce.