The e-retail market in India is expected to regain growth after witnessing a blip in 2016 to become USD 80 billion sector by 2020, said a report by Redseer Consulting.
According to the report the companies are heavily banking on 2017 and a lot is riding on ability of the e-tailers to grow their customer base from the existing over 15 million monthly unique shoppers.
One of the key things to be looked at will be the change in the strategies of the domestic firms such as Flipkart and Snapdeal to fight the US-based rival Amazon.
The industry grew at 180 percent to become USD 13 billion sector in 2015. The growth, however, slowed down barely to 12 percent in 2016 to clock USD 14.5 billion owing to factors such as demonetisation, government’s regulation on discounting and decline in the funding scenario, among other issues.
The report also highlighted the restructuring at top e-commerce firms and mass exodus of senior executives to be an important reason behind the slowdown. E-commerce firm Flipkart named Binny Bansal as its chief executive officer, replacing Sachin Bansal in January 2016. It was followed up with a lot of senior executive quitting throughout the year including the chief executive officer Sanjay Baweja, vice president and private label head, Mausam Bhatt, senior vice-president of engineering among others.
According to the report, the first quarter of the year witnessed mass exodus followed by a quest on how to fill the gap and what the new leadership structure should be like.
“It took 3-4 months for Flipkart to fix the internal organization and associated strategies, and they practically lost this time to do anything significant around growth. A flat growth for the leader in first two quarters contributed to pulling the market down,” it said.
It also added that rival Snapdeal which was the second largest e-commerce firm till 2015 end, not just stopped growing but shrank significantly, giving the second position to Amazon. ” While there are various theories on what led to this drop, we believe it was caused by a combination of industry wide circular trading correction, new found discipline around cash burn and focus on revenue versus the gross merchandise value,” it said.
Source: Money Control
