Mr. Damani sold 15% of his company at HINDSIGHT lower valuations so that he could hold 85,% at HINDSIGHT higher valuations. I am being careful not to use under/over to describe the valuations as it is a subjective matter, and don’t want to start a debate here.
@Gary24 I agree with you on point 2 and 3. I am seeing the same miscalculation by market participants in assigning Terminal Values to auto ancillary manufactures related to ICEVs.
Again, the personal choices of consumers is a very subjective matter and very difficult to predict. While DMart’s current clientele has majority preference towards B&M shopping, the kind of valuations that factor in multi-decade growth should also factor in changing trends in clientele’s shopping preferences. Overall, as the newer millennial generations become a bigger part of the labor market, the shopping preferences will change.
I believe there is a big shift in how this generation values time than its predecessors. We have all heard that phrase that, “the father walks 4 km to save money, while the son takes the cab to save time.” Both are right in there own way. It all comes down to how we value ourselves on a per hour basis. As we earn more, every minute wasted becomes more precious.
That said, it is difficult to say whether e-commerce will conquer it all. Even Amazon is shifting its offerings towards B&M to gain more distribution capabilities. Whether the instant consumption need will also be catered by e-commerce remains to be seen. Like I mentioned in my previous comment, last mile delivery in the next 5 years will not be the same as it is today.
To understand why grocery has been hard for e-commerce to conquer, we need to understand how e-commerce started. It started with books which were non-perishable and easy to ship. Plus e-commerce could keep a larger selection than any physical store and a book is a very standard product, you get what you see from wherever you buy.
Then they branched off to fashion, and gadgets, which were the high value per Kg products, so shipping was not a problem and again perishability and standardization.
But grocery is a whole different animal, we have perishability issues, there is no selection advantage over a B&M store, the value per KG is low so logistics is a drain and on-demand delivery is what is needed. One way Amazon bypassed this issue is by purchasing WFM, WFM will not only become a delivery point for Amazon but WFM will also become a customer to Amazon. This provides Amazon scale to venture into groceries.
It is a similar model they have used again and again. They started AWS because they themselves were the primary customer of AWS and that gave them scale to build this business offering and roll it out.
They are doing the same with building a logistics business by buying cargo planes, they themselves are the primary customer and can provide the service to others as well.
So in groceries, the next step for them to gain further scale maybe to become a supplier to restaurants.
To conclude, a lot has happened in developing the e-commerce side of retail and a lot is left to do. We can at best try to anticipate and place our bets. But it would be folly to write off any segment, value chain as safe from disruption.