One of the well-known conglomerates, Aditya Birla Group, has decided to call off its e-commerce venture – abof.com, which was launched in 2015. It was very evident in the initial phase itself, that the company was struggling to attract the customers, as every other e-commerce platform was. In fact, the group has attributed its e-commerce shutdown to the unviable model of the business.

A couple of years back, when ABG, Reliance, Arvind Ltd, everyone was making a foray into the online fashion retail business, the CEO & Founder of Future Group, Mr. Biyani was very clear on stating that Future Group won’t be doing so anytime soon because he found the whole concept unappealing. Why invest so much money on acquiring customers and then selling things to them for a loss? He mentioned that the customer acquisition cost for an online fashion platform was 20-25%, whereas, for him, it was 2-2.5 %. There was no comparison in the two models of doing business. Experts mocked Biyani then, saying that he would miss the train and online retail cannot be ignored, but it looks like someone else is biting the dust. The only one who benefitted was the consumer, who played the role of the monkey in the fight between the cats.

I think, the group was not very clear on its e-commerce vision. Back in 2013, the group launched Trendin.com to sell its private label clothes, but then eventually shifted to separate websites for different brands. Then it started abof.com, again to sell all the brands under one website. Not saying that the group does not have enough capital to support its e-commerce business, but with investors backing companies like Flipkart and giants like Amazon offering huge discounts to its customers, why would anyone go to abof.com, a website that has limited choices to offer!

Now that the group has decided to shut down the business, many think that they have made a hasty decision and have given up too quickly, because such businesses take time to make money, and because the group could have injected some capital to support the business, the group should have kept patience and what not. But in my opinion, it was a brave decision. They have learnt the right lesson the hard way. If nothing else, they must have learnt a lot about what changes they need to bring in the brick and mortar model, like the speed of stock replenishment, the speed of selling and delivering etc. In fact, all this money can now be put to a better and more productive use. Though the group denies reassessing re-entry in the e-commerce business, I think the right strategy would be to wait on the sidelines and watch the bloodbath, and later when the industry becomes sustainable, then reassess the decision of re-entry.