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Top executives of Chinese e-commerce giant, Alibaba, which has just concluded its biggest 24-hours sales event known as 11.11 with a gross merchandise value of $30.8 billion feels that the Indian e-commercemarket is highly fragmented and it will take time to develop into a mature online wholesale tablets commerce market.

"India for us is a market where we want to be very very patient," said Joseph C Tsai, co- founder and executive vice chairman of the Alibaba Group while addressing a large group of international and local media duting the 11.11 event. "We are patient because we think there is time for the Indian market to develop," Tsai added.

In India the e-commerce behemoth had so far invested more than $2 billion in companies like One97 Communications which operates Paytm, online grocery delivery startup, BigBasket, e-commerce company Snapdeal and online food aggregator Zomato while hardly investing anything significant in its own B2B subsidiary here headquartered in Mumbai.

According to Tsai, the Indian e-commerce market has just reached one-tenth of its potential and is way behind China which is around a trillion dollar e-commerce market. "India is a difficult market with different states having different regulations. We always say that India is a fragmented marketplace as compared to China where the market is more unified," the executive said.

According to another top executive of the company, more than B2C commerce, the company will focus on leveraging the payments business to seek success in India.

"I strongly believe that we don't want to repeat the traditional e-commerce models like C2C or B2C in India. I think the best way to unlock the India opportunity is through how we leverage the payments on ground," said Daniel Zhang, CEO of Alibaba Group.

Tsai also emphasised on how investing in Paytm in India has given the company more insights into the shopping and spending behaviour of the Indian consumers.

"Our investment in Paytm has done quite well and we feel that by having a stake in the payments business helps us to understand the market because payments are applicable to multiple use cases. It helps us to understand how consumers in India interact with the internet and do e-commerce transactions. Through payments we can understand the market better," Tsai said.

Also See: wholesale shoes market in delhi

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E-commerce sales seen at $200bn in a decade

This could be music to the ears of Flipkart, Amazon and others operating in the e-commerce space. Thanks to the rise in digital transactions in India, e-commerce sales in the country could jump to $200 billion by 2026-27 from $15 billion in 2017, a report forecast on Thursday.

According to Morgan Stanley, while the number of Internet users in India stood at around 43.2 crore in 2016-17, this could rise to at least 91.5 crore by the end of calendar year 2026.

It forecast that during this period, the number of online laptop dropshippers could rise to to 47.5 crore (base case) from 6 crore which means that the percentage of online shoppers to the total Internet users would increase to 52 per cent from 14 per cent. It expects the total online retail markets to hit $200 billion by the end of 2026.

The investment banking giant made this forecast in its research report on “INSIGHT: India Equity Strategy: India’s Disruption Decade: 10 for the Next 10 Years”.

According to the report, while India’s e-commerce market remains in a nascent stage and further growth in the next few years will be driven largely by the addition of new online shoppers even as existing shoppers would shop more on various platforms.

It, however, cautioned that this will be a function of the overall funding environment. It may be recalled that a slowdown in funding in 2016 had led to a slowdown in growth rates.

“In the absence of new funding rounds, on-boarding new users to the platforms could slow down, which could impede growth in the e-commerce market in the next few years,” it said.

Morgan Stanley has also projected a “bear case” which says that that if online shopper penetration improves slowly,

the overall e-commerce market could reach a total size of $105 billion by 2026-27 against the base-case expectations of $200 billion.

This forecast comes at a time both Flipkart and Amazon India have claimed huge response to their Great Indian Festival Sale and Big Billion Days sale, respectively.

Also See: how to start dropshipping

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Gucci, the Italian luxury brand, is reluctant to partner with Chinese ecommerce platforms run by Alibaba and JD.com in the world’s largest luxury market because of widespread counterfeiting, its chief executive has said.

“Frankly speaking, on most of the platforms there’s a lot of counterfeiting, and I don’t want to certify counterfeiting because I belong to these platforms,” Marco Bizzarri said on Monday at a dropshipping Business of Fashion conference in Shanghai.

“There’s something wrong with counterfeiting and at this point I want to stay away,” Mr Bizzarri said, adding that he was in contact with both Alibaba and JD.com. “Instead of taking a risk, I wait,” he said. “We are in a situation of wait and see.”

Seeking higher margins and prestige, Alibaba has signed up dozens of luxury brands, including Burberry, Hugo Boss, Tiffany and Moschino to its Tmall Luxury Pavilion platform in the last year, while JD.com has partnered with Kering-owned Saint Laurent and Alexander McQueen, as well as British ecommerce platform Farfetch.

But the Chinese companies have long struggled with a reputation for the rampant selling of counterfeit goods on their platforms. In 2016, the US government put Alibaba’s Taobao platform on its blacklist of “notorious markets” known for peddling fake goods.

Gucci is owned by Kering, the French luxury group, and generated about €6bn of sales last year.

In 2015, Kering sued Alibaba, alleging the ecommerce group encouraged and profited from the sale of counterfeit goods on its platform. But Kering said last year that it would withdraw the lawsuit, and the two companies said in a joint statement they would establish a task force to protect Kering’s brands.

Luxury spending rose 20 per cent in China last year to reach Rmb142bn ($20.5bn), according to consultancy Bain, making it the world’s largest market. Ecommerce represented nine per cent of sales, up from 6 per cent in 2015.

While smaller Italian brands have embraced Chinese ecommerce platforms, the larger French companies have generally been more sceptical. Only a handful of brands owned by luxury house LVMH — notably Spain’s Loewe — sell on Chinese platforms.

Gucci, like LVMH’s Louis Vuitton and the publicly traded Prada, sells its products online in China solely via its own website.

Mr Bizzarri said on Monday that joining an additional ecommerce platform could dilute the sense of exclusivity that is key to luxury brands.

“We have to make sure we maintain this luxury feel, the luxury perception and this kind of exclusivity . . . that is absolutely key for us. We want to make sure [ecommerce] doesn’t impact that,” he said.

See More: dropship companies with no membership fees

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A review of the competition law that has just started is set to find out if the steep discounts offered by online retailers promotes competition or stifles it as alleged by their old school rivals.

A 10-member panel set up by the corporate affairs ministry last week will examine the trends in digital economy, including steep discounts in online wholesale baby onesies retailing, and whether the e-tailers are subject to any restrictions in their access to dealerships from manufacturers.

Conventional retailers who compete with e-tailers are strongly opposed to discounts offered by online sellers arguing that it is aimed at displacing brick-and-mortar dealers and will eventually affect consumer interest.

“Practices in the digital economy, backlog of competition cases to be resolved and the fee structure followed by the Competition Commission of India (CCI) will be reviewed by the panel,” one person privy to the initial consultation process, said on the condition of anonymity. The panel will also comb through central and state government policies that do not foster principles of competition in letter and spirit.

Conventional traders are now readying their recommendations to the panel suggesting ways to put an end to discounted online sale of goods.

“We strongly oppose discounts offered by online retailers. These are not discounts but predatory pricing. We will be requesting the commerce minister to impose a blanket ban on discounted sales by online sellers, which creates an uneven playing field and is detrimental to traditional retailers as well as manufacturers. We are also formulating our views to be given to the competition law review committee,” said Praveen Khandelwal, secretary general, Confederation of All India Traders (CAIT).

Competition law experts said that industry practices, such as manufacturers imposing certain restrictions on online sellers in order to protect a large number of conventional dealers, who also compete among themselves, have been a subject of dispute. In cases where certain brands face intense competition from rival brands, restrictions imposed by a producer on online dealers to protect its conventional dealers may not be seen by the competition watchdog as anti-competitive. This, however, enables producers to control the retail price and may not be in the interest of consumers.

“Online retailers have a transformational capacity in terms of reach, variety and price. They should be protected,” said Subodh Prasad Deo, partner at law firm Saikrishna and Associates, and former additional director general at CCI.

In 2015, two brick-and-mortar retailer bodies, Retailers Association of India (RAI) and the All India Footwear Manufacturers and Retailers Association (AIFMRA), had approached the Delhi High Court arguing that e-commerce companies had undue advantage as they were allowed to access foreign direct investment (FDI), through which they could provide deep discounts that traditional retailers would not be able to match.

To legitimize existing businesses of e-commerce companies operating in India, which so far have grown in a policy vacuum, the government in March 2016 allowed 100% FDI in online retailing of goods and services under the so-called “marketplace model” through the automatic route.

Also Read: 9 Best China Online Shopping websites like aliexpress

It also notified new rules through Press note 3 (of 2016 series), which could potentially end the discount wars, prohibiting e-commerce marketplaces from offering discounts and capping total sales originating from a group company or one vendor at 25%. However, this only remained on paper, while e-commerce companies continued to offer heavy discounts, much to the anger of offline retailers.

The draft e-commerce policy under consideration effectively seeks to regulate all aspects of online retail and recommends strict restrictions, including curbs on discounts. However, the government is currently going slow on finalizing this policy after opposition from major online retailers.

Khandelwal, however, said the proposed e-commerce policy should be implemented immediately.

The competition law review panel chaired by corporate affairs secretary Injeti Srinivas will also examine if the fee prescribed for the petitioners to approach the anti-trust regulator is high. It will also assess if a scheme to reduce backlog of competition-related cases be required, said the first person quoted above.

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Australian retailers need to step up investment in e-commerce, supply chain, data analysis and fulfilment to keep pace with Amazon as the online behemoth prepares to ramp up its local online retail offer.

Retailers such as Woolworths, Super Retail Group, JB Hi-Fi and Premier Investmentshave been investing heavily in e-commerce over the last two years to better compete with pure-play online retailers and satisfy customer demand for more convenience.

That investment has helped underpin strong online sales growth and offset weak sales in bricks and mortar stores, with UBS estimating that e-commerce accounted for more than 45 per cent of incremental sales growth across listed retailers in 2018.

However, the additional spending took a toll on margins and most retailers believe that delivering online purchases is still margin-dilutive, while click and collect, which accounts for more than 20 per cent of online sales at many omni-channel retailers, is margin-neutral.

UBS retail analyst Ben Gilbert says retailers will need to keep spending on websites, supply chain automation, last-mile delivery and data analysis while investing in price to keep pace as the shift to online accelerates.

Also read: Best 3 dropshipping suppliers uk Based

"The retailers here are doing a better job but I'd argue there are still opportunities to improve," Mr Gilbert told The Australian Financial Review.

"If you compare local websites with those overseas there is still room for improvement.

"The risk is some may be under-investing ... they don't need to spend less money than they're spending today."

Woolworths, for example, spent an extra $130 million last year on a new data and digital centre, WooliesX, IT and supply chain, including a new $350 million automated distribution centre, and a cloud-based back-end IT system. Wesfarmers has said it plans to double its investment in digital and data.

Distribution questions

Retailers were also taking differing approaches to distribution – with Super Retail Group, for example, distributing from a centralised distribution centre and JB Hi-Fi delivering direct to stores – and the most efficient model had yet to be proven.

Last-mile delivery was proving to be particularly difficult in Australia because of the tyranny of distance and low population density.

"If Amazon is leading the way there and local retailers can't piggyback off that ... there is a risk they'll need to invest more in distribution to improve their capabilities," Mr Gilbert said.

JPMorgan analyst Shaun Cousins said established retailers had lifted their online game but there was more work to do as Amazon brought its Australian offer up to speed.

"Amazon will have a better Christmas this year than last year, and key events will get better each year," Mr Cousins said.

"But it's a slow grind rather than something that has radically changed the landscape.

"And the impact continues to vary by category, with the supply chain of food, especially fresh food, an impediment to its impact in that category."

Amazon growing

After a generally underwhelming launch last December, Amazon has increased its Australian wholesale lighters product range four-fold to about 80 million stock keeping units and has launched its subscription based free delivery service Amazon Prime, Fulfilment by Amazon, Amazon Music and Echo voice-activated speakers, powered by the company's cloud-based voice service Alexa.

Earlier this month, Amazon added three new categories to its range – luggage and travel goods including outdoor clothing, automotive products and pet supplies – taking the number of categories to 26.

The online retailer is expected to add more categories and services before Christmas and in 2019 while speeding up delivery times, increasing competition for local pure play and online retailers.

Bain & Co believes Amazon could become Australia's sixth-largest retailer within five to 10 years – behind Woolworths, Coles, Bunnings, Aldi and Metcash's IGA network, but ahead of Harvey Norman, Kmart and JB Hi-Fi – with revenues of $8 billion to $10 billion, compared with estimated revenue of $1 billion in 2017.

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With the continuous development of cross-border e-commerce, many sellers are constantly expanding their overseas markets, and promoting the expansion of marketing channels. At the same time, the popularity of mobile and computers has greatly promoted the growth of business. Many sellers are concerned about how to maintain their competitive advantage, understand their customers better and attract more drop shipping companies traffics. Today, you will know how to drive the growth of e-commerce in Middle East.

The premise of the growth：Positioning the right target countries and consumers

There are 18 countries in the Middle East, including Egypt and Iran, with a total population of nearly 400 million. According to data from Adxmi, the population and economy of three countries in Egypt, Saudi Arabia and the United Arab Emirates are considerable. The average age of permanent residents in these three countries is 24.8 years, 28.6 years and 33.5 years respectively. It can be seen that there is no aging population. Data show that the ratio of urban population to total population in these three countries is 39.8%, 78.8% and 89.5% respectively. It shows that the proportion of urban is large, and the consumption group is dominated by young people. Sellers can start with the psychological characteristics of these people and formulate corresponding marketing strategies.

In terms of economy, the three countries, with the population of 1/3 in the Middle East, contributed more than 1/2 of GDP in the Middle East. You can find that the per capita income of the three countries is higher and the Engel coefficient is low. Take the United Arab Emirates as an example, compared with Guangdong Province, the country with a population of less than 1/10 in Guangdong Province, with its oil and tourism support, the per capita GDP achieved up to 42.5 thousands dollars.

From the relevant data provided by Adxmi, female housewives are the "main force" among the main consumer groups. Tourism transportation, clothing accessories, electronic products, the three largest categories stand in the top three. In Saudi Arabia, only 17% of women work, while 72% are housewives and 60% of housewives dominate online shopping.

See More: wholesale tablets

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