Get a demo Do I subscribe? News sign-up
Print

India e-commerce boom benefits B2B

News, 27 April 2016

NEW DELHI: India's e-commerce boom shows no signs of slowing, as a new report predicts the B2C segment will grow sevenfold between 2015 and 2020 while B2B business will double in value.

The study – e-Commerce in India: A Game Changer for the Economy – from the Confederation of Indian Industry (CII), a trade body, and Deloitte Touche Tohmatsu India, a consulting firm, put the gross merchandise value (GMV) of B2C e-commerce at $16bn in 2015, rising to $101.9bn in 2020; for B2B the comparable figures were $300bn in 2014 rising to $700bn by 2020.

As an aside, the Economic Times has noted a shift away from GMV as a primary metric – for example, Snapdeal has announced it will instead focus on growing the number of daily users, while analysts have said metrics such as average order value, growth in number of orders and cost of new customer acquisition are more important than GMV.

The report observed that barriers to entry are higher for B2B e-commerce companies which have to have "a strong business model, long term logistical arrangements with rail, road and ports and also adhere to stringent regulatory and taxation governance".

As well as being valued significantly higher, the B2B segment is also rather more profitable as it pursues a different business model to that prevailing in B2C.

The study highlighted the "lack of heavy discounts, greater emphasis on quality rather than on price, and higher volumes of purchases" in B2B and added that "the majority of B2C e-commerce companies globally, despite being operational for 5-20 years, report low profitability".

But it is B2C that is growing fastest, fuelled by a huge surge in the number of online shoppers which stood at just 20m in 2013; but this is expected to reach 140m by 2018 and 220m by 2020.

By then more than a third (36%) of internet users will be shopping online, a significant advance on the current figure of 11%.

Not only will more people be online and more people shopping but the average amount spent by online shoppers is predicted to more than treble over the same period, from $147 to $464.

And B2C companies are starting to encroach on B2B territory, building platforms for small business owners and traders, who increasingly expect to conduct trade online.

Data sourced from Deloitte, Economic Times; additional content by Warc staff