E-commerce 3.0: Leveraging E-marketplace To Boost Trade

by CXOtoday News Desk    Mar 27, 2014


The rising potential of e-marketplaces and internet-enabled trade is encouraging a large number of Indian businesses, particularly the small and medium enterprises to jump on to the e-commerce bandwagon.   eBay India recently released the ‘Commerce 3.0’ report to showcase the impact of internet-enabled trade in the country. The report provides insights on how Indian merchants are increasingly leveraging the online route to boost trade, both nationally and internationally.

“Internet-enabled trade overcome distances and makes the world “flatter” with fewer barriers to business,” states the report. “United States, United Kingdom and Australia are India’s main trading partners on eBay while Australia & Russia are experiencing the largest export growth from India. “

The Commerce 3.0 report was unveiled by Latif Nathani, Managing Director, eBay India along with Ajay Sahai, Director General, Federation of Indian Export Organisations (FIEO) and Praveen Khandelwal, National Secretary General, Confederation of All India Traders (CAIT).

Although CAIT has been strongly opposing foreign direct investment (FDI) in the retail sector, Khandelwal explained that they are open to e-commerce platforms like eBay as they can play a vital role in supporting Indian exporters. “the CAIT is opposing entry of FDI in online shopping but at the same time is making all efforts to upgrade and modernize the trading community and in pursuance of the same providing online market place platforms like eBay India, will facilitate our members to sell directly to consumers through their website. This opened the door for thousands of small and medium-sized retailers across the country to expand their geographical presence to reach buyers in India and around the world,” he says.

The report also explains the critical role of new technologies in revolutionizing the way Indian companies can buy and sell through the online channel.

 The Key findings of the Commerce 3.0 report are:

Creating a level-playing field for small and large entrepreneurs: Internet-enabled trade helps to provide a level-playing field for small entrepreneurs. National and export sales are less dominated by the largest firms, and new firms have fairly high shares in overall sales. This is because entry barriers for Internet-enabled trade are lower, which makes it easier for newcomers to enter the market. Thus e-commerce platforms have a pro-competitive effect. 32% of exporters on eBay India are newcomers.

Internet-based trade boosts National Trade:E-Commerce supports the domestic economy and brings remote sellers and buyers closer together. Domestic sellers on eBay India are reaching out to an average of 19 states across the country.  Sellers located in Delhi and Maharashtra by far dominate as the largest net exporters within India. Kerala, Karnataka and Andhra Pradesh are the largest net consumers within India on the eBay platform. The five largest inter-state trade flows, which are from Maharashtra to Karnataka as well as to Tamil Nadu, followed by flows from Delhi to Karnataka, Maharashtra and Tamil Nadu.

Global Reach:  Internet-enabled trade overcome distances and makes the world “flatter” with fewer barriers to business. Sellers on e-marketplaces like eBay tend to export and do so to an average of 31 international markets. Today, United States, United Kingdom and Australia are India’s main trading partners on eBay while Australia & Russia are experiencing the largest export growth from India. 

E-commerce boosts National Welfare: Internet-enabled trade enhances competition and reduces prices because it offers businesses very low market entry barriers. Consumers in remote or rural areas benefit most in these markets, where competition is traditionally weaker because there are fewer suppliers. Lower prices also lead directly to welfare gains because a high level of competition, allowing buyers to compare prices from a variety of retailers, helps bring prices down. Another key source of welfare gains derived from Internet enabled-trade is access to products as eCommerce platforms reduce search costs and make products tradable that were otherwise not sold. This directly benefits sellers and consumers.The report also calculated the welfare gains that would prevail if all international trade were to become Internet-enabled. For India, the welfare gain was estimated to be 67%, the third highest among the leading countries of the world.

Breaking the Barriers to Internet-enabled trade: The full potential of internet-enabled trade has not yet been realised. Internet-enabled trade needs an enabling policy environment. It is currently subject to a wide range of restrictions and faces trade barriers, especially for crossborder transactions (exports & imports). The following focus areas will further boost internet-enabled trade in India:

- Better internet connectivity Encouragement of a “Less - Cash” economy

- Simplification of custom procedures

- Liberalisation of overly Strict Trademark Exhaustion Regimes

- Competitive shipping rates for sellers