The world’s largest online auction house eBay is ready to invest more in India’s US$10 billion e-commerce market.
The company has been in India for seven years but now sees its position there challenged, not only by major global players like Amazon, Alibaba and Groupon, but also by local upstarts such as Flipkart and Snapdeal. eBay has more than 3 million registered users in India. An analysis made by the consulting company Technopak predicts that the e-commerce market will expand from US$10 billion today to hit the US$70-billion mark by 2020.
Rapid growth in internet usage is widening the scope of e-commerce, from mostly travel and entertainment focused consumer behavior to commodity shopping.
Growing brand-name consciousness among middle-class shoppers is also giving internet a boost. India’s US$10 billion e-commerce market, dominated by such online travel portals as MakeMyTrip.com and Yatra.com. Local startups such as HomeShop18, OLX, Quickr and Snapdeal cover a wide range of articles, including apparel, cosmetics and electronics.
eBay is now rethinking its strategy. As profit margins narrow in electronics sales, there is a noticeable switch to brand-name apparel and lifestyle products.
In an interview in Mumbai recently, eBay country manager, Muralikrishnan B. said India is among the fastest-growing markets and has been identified as one of the significant potential markets for the company. “The talks of us having missed the bus are exaggerated.”
Muralikrishnan was involved with Sify Technologies before joining eBay at an early stage in India. He defends what might seem a wait-and-see business policy: “Most of the new business models are just waiting to implode. We have chosen the cautious route, unlike a lot of Indian businesses who are blindly investing money without having an eye on sustainability or profitability.
“We waited for the right moment because we didn’t want to get caught up in the clutter. We were sure a lot of this new money will dry up and that has already started to happen.
“At some point of time Amazon will enter India and they are a credible threat to us.”
eBay’s own strategy is to improve supply chain and distribution by signing contracts with courier services.
In global terms, the Indian e-commerce market accounts only for a miniscule 0.05 per cent, according to Technopak. Online shopping in India has been hampered by low confidence in electronic payment and regulatory issues have prevented eBay from deploying its own service, PayPal. eBay hopes that the Reserve Bank of India will loosen up regulations soon.
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