Ongoing Coronavirus pandemic has affected every part of the world. Because of lockdown rules, people stayed at home & avoided public gatherings which changed demand/supply matrix & had adverse impact on businesses.
For any Retail business: Customer is the King & since king stayed away from public places. Malls, Brick & mortar shops, movie theatres’ & offline stores saw the biggest falls in their sales & revenue.
Companies adapting to new technologies especially to online sales & services are the ones less affected compared to Brick & Mortar shops (offline stores). During the lockdown period, U.S. E-commerce saw a sales jump of 49% as people continued to buy online essential goods & services from the comfort of their home & similar trends are observed in India as well.
In fact, Amazon India hired a 50k temporary worker during the lockdown period.
Worldwide E-commerce sales contribute 14% to total retail sales (online + offline) and expected to reach $6.5 trillion by 2023 which is double from present yearly online sales of USD 3.5 trillion.
Meanwhile, in India, the online ecosystem is growing at a tremendous rate of 31% with Gross sales of $46.05 billion in 2019 alone. Ease of access, better prices & deals along with more user control are some of the reasons for e-commerce growth & popularity.
According to any Investment book, which tells us to buy the stock at right time & invest in the future proof stock, Online E-commerce space does provide us with that future growth & profitability.
Here is the list of companies engaged in an online business (in some capacity or other) which are listed on the Stock Exchanges:
Info Edge(India) Ltd.
Thinking about Indian E-commerce first name comes up is Info Edge
Majority shareholder of nakuri.com, 99acers.com, Jeevansaathi.com, Zomato, policy bazaar, it is a pioneer in the Internet business. Info Edge operates in B-to-B & B-to-C business model. Recruitment, Matrimony, Real Estate are key revenue segments. Commission on sales, subscription fees for services, advertisement on websites, Delivery fees are the ways through which the company generates online revenue. Info edge has Investment in more than 20 Internet start-ups.
Matrimony.com Ltd
Company is engaged in providing online matchmaking & marriage services & operates 20 regional language websites with the largest user database of 4.6 million profiles. Key revenue segments are matchmaking & marriage-related services like photography, catering, wedding venues. Listing fees from vendors & subscription fees to view profile details generate online revenue.
Increasing Internet penetration & the young unmarried population along with market share shift from unorganized towards the organized sector provides a lucrative Investment opportunity.
IRCTC Ltd
IRCTC is a wholly-owned subsidiary of Indian railways, its web portal is only in India to book online travel tickets. On average, more than 8 lakhs tickets are sold every day via the web portal.
Virtual monopoly business & high barrier to entry makes it an attractive business. IRCTC also plans to operate private trains on selected 50 routes with luxury facilities which could be a future growth driver for company profitability.
IndiaMart Intermesh Ltd
India’s largest online B2B marketplace for industrial products, Indiamart covers 56 Industrial sectors with 67 million product listings as of FY20. Indiamart ltd. earns major revenue from ‘subscription packages to suppliers’ to list their products on the website and in return provides leads generation & payment management.
The website provides a two-way product search connecting buyers & suppliers. Buyers locate suppliers by viewing webpage containing the supplier’s product & services or by postings request for quotes(RFQs) which enables the best price discovery.
MSTC Ltd
Kolkata based, MSTC Ltd is engaged in providing e-commerce services like e-auction/e-sale, e-procurement of Industrial raw material & development of customized software. Company is also engaged in the recycling of auto & white goods products.
MSTC Ltd. has virtual monopoly & conducted 35000 auctions in minerals, Iron ore, coal block allocations in FY19. Transparency of e-auctions is a top priority for the company. The first-mover advantage with a scalable technology platform will help gain future business for the company. It plans to add private clients for its auctions platform & also include agro-products for auctions.
Conclusion
As more & more companies shift focus towards online services, e-commerce is a sustainable mainstream business. Future growth in e-commerce depends on Internet penetration, the use of artificial Intelligence & machine learning technology to track consumer behavioural patterns & adapt to consumer demand change.
Important qualitative parameter for online business:
What do you think about e-commerce growth? Please do let us know using comment section.
Disclaimer:
I, Sreenivas Ajankar shall take no responsibility for any losses occurring out of investment/trading decisions you make based on the contents of this article.
We are not SEBI registered investment advisors. This article is meant for educational purposes only, please consult your investment advisor before acting upon any information you see here.
We may or may not have open positions, kindly assume that we are biased.
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A nice & thorough explanation was provided by this article, e-commerce business could well be the future for shopping. Also, it did provide some potentially great views about stock related to e-commerce. Great writing..
It was easy to comprehend what the article was trying to convey.I m naive about the e-commerce business in depth.It did clear few of my doubts on how the consumer shifted their demand elasticity in this pandemic!
Could have been a bit more in detail!
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