Do the New FDI Rules Mean the End of Big Fat Online Discounts?

Money Matters

Do the New FDI Rules Mean the End of Big Fat Online Discounts?

Illustration: Shruti Yatam

 

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t has always taken a bit of tugging and pulling to explain the eCommerce business model to a regular person. Intuitively, the idea that bleeding money indefinitely can be a good thing runs somewhat against the grain of sound economic logic. Try convincing a local shopkeeper that it is in his best interest to give you 60 per cent off and 10 per cent cash back and see if he doesn’t chase you out of his establishment with a broomstick priced firmly at MRP. But the model has persisted nonetheless, emboldened by outlier success stories such as Facebook and Amazon (US), and fuelled by investors too giddy with the prospect of unicorns to really care that profits too, might be just as mythical.

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