E-commerce has not just been the biggest disruptive force for the retail sector in India – it has also been the biggest source of subsidy for shoppers. Estimates by retail consultancy Technopak suggest that direct subsidy to consumers because of e-commerce this year would be over INR12,000 crore (INR120 billion, USD1.85b). This assumes total GMV (gross merchandise value of goods sold on e-commerce sites) of USD10 billion and average discount on MRP (maximum retail price) of close to 20 percent.
Next year, the savings to the online shoppers could touch as much as INR20,000 crore to INR25,000 crore, while GMV could rise to around USD25 billion or more, according to Technopak founder Arvind Singhal. The calculation for 2016 assumes that GMV would more than double for the industry, but the discounts may fall.
This is for the first time that the e-commerce sector is getting real about costs and spending, realising perhaps that euphoric fund-raising could be followed by investors’ questions on profitability. Investors have, for a while, raised concern over cash-burn by e-retailers on customer acquisition.
(Source: Business Standard )