Top
MBA colleges in Delhi NCR are engaging in serious conversations with ecommerce companies
these days. These conversations are meant to tap the employment generation
potential that these ecommerce companies are bringing to the table. While some ecommerce
firms have been able to scale up their operations and have gained market share,
many others are still in stages of infancy. It makes enormous great sense for
top MBA colleges in Delhi NCR to look at the ecommerce vertical with not just a
sense of urgency but also with a sense of importance of purpose. Ecommerce is
here to stay in India and the vertical is expected to register growth in the
coming years. With all the rhetoric surrounding he ecommerce boom in India, it
is worthwhile for top MBA colleges in Delhi NCR to objectively assess the
comparative strengths and weaknesses of India and rest of the world. More over
it is also worthwhile to assess of the current growth spree is a bubble or is
here to sustain itself in the long term.
Ecommerce
Insights: How do the Numbers Stack Up?
After
all the hullaballoo on ecommerce explosion, it is obvious to ask for the relative
performance of India against the other major ecommerce markets in the world. In
countries like United States of America and China, the ecommerce market size
exceeds U.S. $ 150 billion. In comparison to these countries India is still in
stages of infancy although there are no doubts about the growth rate. An
estimate made by PwC asserts that in the last five years the ecommerce market
size in India has had a CAGR of 35% which is impressive. The market size has
grown from U.S. $ 3.8 billion in the year 2009 to U.S. $ 12.6 billion in the year
2013. Studies conducted by IAMA (Internet and Mobile Association of India) show
that online travel leads in terms of market share with a clean 70% followed by
other verticals like electronic consumer goods. Both the market place and
online segments of e-tailing have grown by 10%.
In
the domestic e-tailing segment the market share by revenue is split as shown
above. The data collected by IAMA for the year 2013 show that electronics is
the largest product segment with 34% followed closely by apparels and
accessories with 30%. Books have a market share of 15%.
Comparative Factors that Will Fuel
Growth of Ecommerce
According
to Ecommerce Europe, the United States, United Kingdom and China together
account for more than 57% of the world’s total B2C ecommerce sales. In the year
2013 China had total ecommerce sales of U.S. $ 328.4 billion and India had
total ecommerce sales of US. $ 10.7billion. This effectively meant that India’s
total sales stood at 3.3% of that of China in the year 2013 despite having a
strong demographic dividend profile just like China. Probably the reason behind
this deficit is the fact that India’s internet penetration stands at 46 million
households against 207 million households of China.
However
studies by PwC, ASSOCHAM, Ernst & Young and IAMA offer conclusive evidence on
the growth prospects of the ecommerce vertical in India and the rest of the
world. Here is a capsule form of the findings of the major research works
conducted so far.
India
has a relatively low but very fast growing internet population of roughly 243
million people as measured in the year 2014.
India also scores pretty badly in terms of
internet population as percentage of total population. As such only 19% of the
total population of India consists of internet users.
The analysis of the demographic dividend
that India has its disposal further bears testimony to the prospects of growth
that India has in the ecommerce vertical. The demographic segmentation of the
total internet population of India reveals that more than 75% of the internet
users in India belong to the age group of 15- 34 years of age. This age group
consist of the biggest customers of online merchandise and thus reflects growth
potential.
Financing Ecommerce Growth in India
With
the new government being elected in 2014, investor confidence has found its way
back into corporate board rooms. In the year 2014 investors had strongly rooted
for the ecommerce vertical with big investments in some of the top companies and
financed their expansion strategies. Several of India’s PE funds have been very
active in financing expansion of ecommerce companies in India enabling them to
achieve a scale up.
Here
is a list of the major investments made by PE funds in ecommerce companies in
India in the recent times.
The
above data had been collected by students for their summer internship project
on ecommerce for MBA courses that mandate research work. The data was collected
from a publication of Venture Intelligence and mentioned in the bibliography.
At
Ishan Institute of Management & Technology, the top MBA College in Greate
Noida the academicians and students of the faculty of business administration
have collaborated on various research projects to bring you industry specific
insights.
