With the new IPO in the market infibeam which operates online shopping site: www.infibeam.com
I would like to share my view point.
Most of E-Commerce companies which are listed or unlisted in this sector or E-Commerce service sector are only focusing on gaining market share which means just working on sales.
Selling with negative profit which will not last long in any business.
Below is the category which I always apply to invest in IPO.
1) Is the 30 % or more than this of IPO's money used for payment of its debt - I Avoid such companies.
2) Is the money used for just expansion of its business ? if yes I apply below filter
a) Is the expansion plan of the business on aggressive mode by promoters ? if yes - I Avoid such companies.
simple maths :When you are running fast just in case you fall down the probability to get up and run again is less whereas if you are walking and just in case you fall down the probability to get up and walk again is more.
b) Whats the profitability of the business Annually ? if negative - I Avoid such companies.
If I take one of the most popular company Flipkart , my gut feeling is the way its operating and raising money from investors very soon it will move to the road where it has to look for a buyer for its business.
so don't get carried away with the name of E-Commerce.