HighKart.com has become the first e-commerce site in India to exclusively accept bitcoin as a payment method.
Launched by Delhi-based entrepreneur Amit Kumar, the online store retails more than 150 products, ranging from digital currency mining equipment to fashion accessories.
Currently, there are more than 500 e-commerce startups in India – most having popped up within the last five years. Companies like Flipkart are dominating the local market, making it difficult for new players to enter.
HighKart is taking an unusual, and brave, route into this mêlée by eliminating the large potential consumer base that uses fiat currencies and opting to accept only bitcoin.
However, HighKart’s model relies on rejecting fiat in order to turn over profits. Kumar explains that being an exclusively bitcoin retailer helps him offer competitive prices because he does not have to pay commission to payment processors. He added:
“I can also hold onto the bitcoin and wait for the valuation increase and still make money out of it, which is not possible with the fiat currency.”
Bank jitters
While HighKart is not the first Indian business to say ‘yes’ to bitcoin, other ventures are accepting it alongside fiat.
WeRwired, a Bangalore-based geospatial, security and entertainment consulting company, is one of them. The owners started accepting bitcoin payments in order to give more choice to their customers, they say.
Castle Bloom, a salon in Chandigarh, became the first physical outlet to start accepting the digital currency late last year. However, that honour was short-lived and they reversed their decision following the recent Reserve Bank of India raids on bitcoin exchanges. Castle Bloom refused to comment further.
Those raids, along with an RBI warning on virtual currencies, have raised alarm in the Indian bitcoin community, but Kumar is not worried about the warnings because he says that all of the products in his catalogue are legal in India.
He says that a big reason for starting this venture was to get people to start using their bitcoin, as opposed to simply holding them:
“In the Indian ecosystem, bitcoin is still just a holding asset – this is not going to help the Indian bitcoin community to grow.
If you want to make it a sustainable currency in the longer run, then there should be an intrinsic value to the currency. And that comes when you start using that currency.”
Kumar is so confident about his business model that he is planning to expand its operations in the American market as well.
Coins in the wrong basket
While HighKart is the first stab at a bitcoin-exclusive e-commerce venture in India, many other enterprises are already up and running. Currency exchanges are the most popular bitcoin-based business right now.
Venture capitalist Maninder Gulati says, however, that both e-commerce and exchanges are not useful for the Indian bitcoin ecosystem at the moment.
Gulati is the vice president at Lightspeed Ventures, a company that has invested in three bitcoin startups including BTC China.
“Most of the startups that have come about have taken a short-term view,” he explained. “Their view is ‘let me build an exchange’ rather than actually solving some of the core problems: liquidity, awareness, convenience, security.”
He is encouraging entrepreneurs to take a different approach:
“If I was an entrepreneur, I would look at things differently. I would say, what is really the India-specific case that solves a certain problem using bitcoin that cannot be solved otherwise. E-commerce is not that problem right now.”
Another concern with launching a bitcoin e-commerce site in India is the low popularity of digital currencies in the country. However, Kumar debunks that myth:
“There is a misconception about the bitcoin community in India being small. People have bitcoin; they are just afraid to use it. We are getting orders from very remote parts of India, which we never imagined.”
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