Research firm Spire Research and Consulting has backed with statistics the speculation that was rife in the ecommerce grapevines. In the current and eminent market bloodbath, not more than 2 or 3 players would survive in the next four or five years.
Japnit Singh, Spire Director (Singapore and India) said that the capacity to bear losses would determine which company stays on and which loses out. However, Singh added an important twist to the plot,” We expect firms which are serving a particular geography or focussed on particular locations could survive this scenario.”
Snapdeal.com seems to have had this foresight already, since it plans to set up 100 warehouses in 30 small cities and focus on advertising and branding in these tier-2 regions. Kunal Bahl, CEO Snapdeal.com said that it would be shoppers in India’s small towns who will mainly drive the growth of the country’s ecommerce. The $627 million that Snapdeal raised would also be used to tap into these markets and double its engineers to almost a thousand to manage the upcoming technology centres.
As per Spire’s quarterly white paper titled India’s E-Tailing Industry – Seller’s Perspective 2014, over 54% of businesses reported a growth of more than 20% after having gone online in revenue sales. The apparel sector with 82% and food with 80% have an advantage over consumer electronics which reported a 72% growth. The report also forecasted baby products, books, home décor and jewellery would witness a high growth.
The report highlighted the top three obstructions that online sellers have to deal with. The first was the lack of robust payment mechanisms. The second too was monetary – the risks and delays associated with Cash on Delivery (CoD) options. The third problem pointed out by the report was the difficulties pertaining to logistics and order placements.
The saturation point of markets in small towns is much further off, while the metros already have an over-exposure towards consumer products. Hence, the country would truly be on par, and online sellers will find a greater consumer base as well. The sellers would still have issues to handle, and the marketplaces would have to fight harder to survive – but aren’t challenges what keep us all going in the e-tail space?