RNB Global University

School Of Commerce and Management

CENTER FOR LEADERSHIP DEVELOPMENT

Presented By -

Rishabh Golchha
MBA 4th SEMESTER
INTRODUCTION TO THE E-
COMMERCE INDUSTRY
E-commerce has transformed the way business is done in India. The Indian E-
commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5
billion as of 2017. Much of the growth for the industry has been triggered by an
increase in internet and smartphone penetration. As of August 2020, the number of
internet connections in India significantly increased to ~760 million, driven by the
‘Digital India’ programme. Out of the total internet connections, ~61% connections
were in urban areas, of which 97% connections were wireless.
 MARKET SIZE
Propelled by rising smartphone penetration, launch of 4G network and increasing
consumer wealth, the Indian E-commerce market is expected to grow to US$ 200
billion by 2026 from US$ 38.5 billion in 2017. Online retail sales in India is
expected to grow 31% to touch US$ 32.70 billion in 2018, led by Flipkart, Amazon
India and Paytm Mall.
Smartphone shipments in India increased by~8% y-o-y to reach 50.0 million units in
the first quarter of 2020, driven by positive shipments of all smartphone vendors in
the market. Samsung led the Indian smartphone market with 24% shipping share,
followed by Xiaomi at 23%.
 PORTER’S FIVE FORCE MODEL

Bargaining power of suppliers - In the Ecommerce industry, the bargaining power of the suppliers is generally low to moderate.
The reason is that the rules are set by the brand and the suppliers have to follow the code of conduct set by them. Most of the
ecommerce brands are highly cautious regarding their supplier relationships and set a code of conduct related to quality, labor
and wages as well as sustainability. Despite the number of players in the industry having grown, the suppliers do not have too
many options and therefore are bound by the rules that the brands have set. It is why the Ecommerce brands have the upper hand
and the bargaining power of the suppliers is low. Some of the suppliers may have some bargaining power because of their size
and quality.

Bargaining power of the buyers - The bargaining power of the buyers is moderately high in the ecommerce industry. It is because
several small and big brands ha e cropped up and there is hardly any switching cost for the customers. Today’s customer is well
informed and has every piece of information available at a single click. Apart from it some of the physical retail brands have also
entered the commerce market and the physical retail market itself adds to pressures. Most of the brands are trying very hard to
retain every customer and for this purpose they make very large investments in technology and customer service.  Due to all
these factors the bargaining power of the buyers is moderately high the factors that can moderate their bargaining power include
brand image, quality of products and service and prices.
 PORTER’S FIVE FORCE MODEL
Threat of substitute products - There two main threats in terms of substitutes for the Ecommerce brands.  The first are
the competing e-retail businesses and the second are the physical retailers. Brands try to earn a competitive advantage
through low prices, better quality of products or through a better overall customer experience.  For the customers there
are no switching costs and they can easily switch from one e-retailer to another or from ecommerce to physical retail.

Threat of new entrants - The threat of new entrants is low to moderate in the ecommerce industry. This is because
there is a need for large investment in technology, human resources and marketing. The barriers to entry are
moderately high.  One can enter with enough capita. However, the difficulty is in terms of building brand image
and trust with the customers. So, the overall threat from the new entrants gets moderated.

Rivalry in the industry - The level of rivalry in the industry is high because of the large number of players. The number
of local and global brands in the ecommerce market has grown and this has also led to higher competition. Apart from
Amazon, Ebay, and Alibaba, there are several other local brands like Flipkart, Coles etc along with some of the retail
brands like Walmart and Costco. So, the overall rivalry between these brands gets to be very high.
 SWOT
ANALYSIS

Strengths Weaknesses Opportunities Threats

• Availability • Consumer • Market Reach • Highly

and Ease Mindset • Technological Competitive
• Global Access • Absence of Advancement Market
• Start-up Communication • Marketing • Digital Fraud
Friendly • Cost Possibilities • Data Privacy
• Discounts • Generation Gap • Government
Regulations