Only 2-3 e-commerce firms will survive market bloodbath: Spire
Many smaller firms would not be able to keep up the momentum, and would either shut shop or be acquired by bigger players
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New Delhi: The multi-billion dollar Indian e-commerce industry is set to see consolidation in the next 4-5 years with only 2-3 big players surviving the market “bloodbath”, research firm Spire Research and Consulting said.
Many smaller firms would not be able to keep up the momentum and would either shut shop or be acquired by bigger players, the firm added.
“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 4-5 years, we expect only 2-3 big players to be present in the Indian e-commerce market,” Spire Research and Consulting senior director (Singapore and India) Japnit Singh said here.
“However, there is going to be an exception to this trend,” he added.
“We expect firms which are serving a particular geography or focused on particular locations could survive this scenario,” Singh said.
Spire Research also released its quarterly white paper, “India’s e-tailing industry - seller’s perspective” 2014.
According to the report, over 54% of businesses reported a growth of more than 20% since going online in revenue sales. The survey was done across 13 states on 300 retailers through one-on-one, online and telephonic communications.
According to the white paper, businesses in the apparel (82%) and food (80%) sectors seem to have an advantage by going online as compared to consumer electronics (72%).
Moreover, consumer electronics seem to have a lower potential as consumers are more inclined to be involved in the purchasing process.
“There is expected growth from other sectors as well which consist of baby products, books, home decor and jewellery. Spire also forecasts that by 2020, 45% of businesses will see their online share grow to between 20-50% of sales,” the white paper said.
On the other hand, businesses were expected to gain sales revenue from traditional/offline channels with sellers following a dual strategy of combining online with offline sales, it added.
The white paper also revealed that e-tailing space will eventually be dominated by a few large capital heavy firms given the need for nationwide logistics infrastructure and a currently limited consumer base.
At the same time, Tier II and III cities are expected to have a faster adoption rate with greater sales margins derived directly from online channels. These channels will follow integrated strategy combining both offline and online sales.