Potential of eCommerce in India in the coming years


People are having lot of Questing when its comes Evolution of eCommerce in India.Which categories will dominate the market, what will be the challenges, can multiple players exist for the same market?

We think at this point of time, e-Commerce in India thrives on few major factors (from customer’s point of view), and these factors would continue to dominate for atleast a couple of years….

1. Discounts
2. COD
3. Marketing

Which implicates just one thing – All three e-commerce enablers eat up the margins of the seller. Be it discounts, or COD, or Marketing – All end up eating the merchant’s profit margin in a big way. And if the volumes are low, they end up in a loss as well (which is the case with all the leading e-commerce players as of year 2014).

So, the natural advantage in e-commerce goes out to those merchant’s who have the advantage of selling higher margins categories, like Apparels, Fashion Stuff, Luxury Items, etc. These categories still have a hope ofcovering the additional costs of e-commerce in India. However, the irony is that these very categories have the maximum number of competitors.

One more fact about Indian market as of 2014 is that – People are still flocking to e-commerce portals to purchase branded stuff. (And that’s why the rich e-commerce players have engaged themselves in creating in-house brands, some of them have sure seen some success. However, the concept of in-house brands so far, is nothing more than an experiment).]

So in the Short Run (till 1-2 years from now): We will see a huge number of players selling Branded products with high margin products and in a highly competitive market (Apparels, Fashion Products, Luxury Items, etc). With a little or unknown focus on the in-house brands or niche products.

However, in a Slightly Long Run (until 2-3 years from now): We will see a reducing number of sellers dealing with the standard Branded products, and an increasing focus on the niche products and in-house brands in each of those categories which have the potential of offering high contribution margins.

And in the Longer Run (5 years from now): We will see a handful of BIG(Less than 10) e-commerce businesses dealing with the Global brands, a Hugenumber of small and medium e-commerce players selling niche products across categories.


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