Study: Indian e-tailers in for a bloodbath
India’s multi-billion dollar e-commerce market is set to experience a “bloodbath”, with only two to three major companies surviving, a new study says.
The study, by Spire Research and Consulting, says that many smaller companies will not be able to keep up with the rapidly growing market and will either shut their doors or be absorbed by larger companies.
“There is going to be a bloodbath in the market. It will all depend upon a company’s capacity to bear losses. In the next four to five years, we expect only two to three big players to be present in the Indian e-commerce market,” Spire Research and Consulting Senior Director (Singapore and India) Japnit Singh said.
The study put this trend down to a requirement for nationwide logistics infrastructure, and the fact that India’s customer base is still limited.
However, not all parts of the e-commerce market will bear the brunt equally, with Singh expecting companies which serve particular geographical areas to have a chance at surviving the scenario outlined in the study.
Not all the amalgamation may come from within the country either, as Japanese telecom and media group SoftBank Corp recently announced its intention to move into the Indian e-commerce market, with plans to invest $10 billion into the rapidly developing sector.
Their investment strategy was laid out on 28 October, and begins with the $627 million purchase of online marketplace Snapdeal.
Spire Research also released one of its quarterly white papers focused on India’s e-tailers, which states that more than 54 per cent of businesses had reported growth of upwards of 20 per cent since they shifted to online selling.
Spire forecasts that by 2020 most businesses in India will see online sales grow to between 20 and 50 per cent of their total sales. So far, the study says, apparel and food have seen the biggest advantage in investing in e-commerce marketing, while consumer electronics has struggled due to a desire by consumers for a more personal purchasing process.