Is eBay Losing The Race In India?
As ecommerce in India grows at an exponential pace and global players such as Amazon increase their investments in the region to capture a higher market share, eBay (NASDAQ:EBAY), appears to be impacted by new competition. The company’s revenues in India grew by 23% in FY15, compared to the 33% number in the previous year. [1] Despite having the first mover’s advantage by entering India as early as 2004, eBay seems to be losing to local ecommerce players such as Flipkart and Snapdeal who have reported more than 100% increase in their sales last year. We believe, while other players including Amazon are investing heavily in India, eBay’s appears to be lagging behind due to its inability to adapt to local trends and sustain a competitive edge.
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Endgame Or Revival ?
eBay appears to be facing several problems at both the buyers and sellers end in India. Customers are unhappy due to fake listings, bad customer service and delays in deliveries and refunds. Its more than 30,000 sellers across more than 4000 cities in India are unhappy with the seller support and remittance issues. [2] As local players work overtime to grab a share in the growing e-commerce market in India, eBay seems to be losing out to them, a repeat of its story in China. There it was overtaken by local player Alibaba, despite having the first mover’s advantage. eBay failed to understand the local market and customers in China and lost out on a huge growth opportunity.
Amazon believes that the e-commerce market in India is a trillion dollar opportunity. [3] And according to Goldman Sachs this market will be around $228 billion by 2030, lower than today’s U.S. e-commerce market ($281 billion) but 10 times as large as India’s current market. [4]. With less than 20% internet penetration, India’s internet users in number surpassed those in the U.S. at the end of December 2015, which is an indicator of a huge growth opportunity. [5] [6]. EBay does not appear to have the right strategy in place to tap into this opportunity and is losing out to local players.
However, eBay still has a chance of revival in India. The company entered into an agreement with the Ministry of Women and Child Development in India to market globally, products made by women entrepreneurs in India. [7] This should increase its growing population of sellers in India. The company claims that every 10 seconds somebody in the world buys a product from eBay in India, [2] indicating the company’s popularity in the region remians. Although it is no longer among the top 5 e-commerce websites in India, eBay could revive itself in this growth market by better adapting to local needs, improving customer service and seller support, and building out its brand. A more focussed strategy can help eBay regain its lost ground in India.
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Notes:- EBay India revenue growth falters even as rivals thrive, LiveMint, January 15, 2016 [↩]
- Is eBay losing its charm, Indian Online Seller, July 2015 [↩] [↩]
- How Jeff Bezos aims to conquer the next “trillion dollar market”. The Inside Story, Fortune, January 1, 2016 [↩]
- The Epic Battle For India’s E-Commerce Market, The Wall Street Journal, October 2015 [↩]
- Internet Users per 100 people, The World Bank [↩]
- India on course to overtake US next month in Internet user base, Livemint, November 30, 2015 [↩]
- WCD, ebay partner for online platform for women entrepreneurs, Financial Express, January 14, 2016 [↩]