Ecommerce is not as big a deal as you think – it’s in fact much bigger a deal than you think. Flummoxed?

Mind this! In this fast, fast world of vanishing moments of patience, ecommerce has come up as the best fix with convenience, comfort, and choice – all bundled into one – delivered at your doorstep. Little wonder, India’s $103 Bn ecommerce market is on course to create a $325 Bn opportunity by 2030.

But the deal doesn’t end there. The ease of distribution on ecommerce made it easy for emerging segments like direct-to-customer (D2C) to grow into a $100 Bn market and quick commerce to zoom into a $5.38 Bn business segment.

With a manpower resource running into millions, an industry-wide growth rate of 15%, and potential to make up 2.5% of an estimated $7 Bn Indian economy by 2030, ecommerce is indeed far bigger a deal than ever imagined.

Mind this, too! While the role of ecommerce behind the making of some of the most significant D2C brands remains indisputable, the hefty cost of building a brand on these platforms remains overlooked in most cases.

Ecommerce has removed the presence of intermediaries in the distribution network, but it has slapped commissions on small entrepreneurs. The online marketplaces helped them reach a wider section of consumers, but also asked them to cough up the cost of advertising. If ecommerce helped brands with logistics, then it charged for storage and returns as well.

The multilayered levies in the form of platform fees, commissions, storage charges, delivery costs and advertising expenses have grown as a major cause for concern for D2C brands building on the ecommerce ecosystem. For open marketplaces like Amazon and Flipkart, the platform fees alone can range from 30% to 40% of the selling price, depending on the product category and the scale of the brand, an Inc42 probe has revealed.

That’s not all. The brands also need to pay the GST on the sales done on online marketplaces. They have little choice but to bear the payment load while also investing heavily only to remain visible to consumers.

“As a new brand in a highly competitive category like home décor, after spending on ads and platform fees, we’re left with almost nothing at the end of the day once the sale is closed,” rued the founder of a fledgling brand with an annual revenue of INR 50 Lakh and multichannel presence. Most of the founders Inc42 spoke to chose to be anonymous because they rely entirely on ecommerce and quick commerce for their survival.

In fact, several founders of D2C brands pointed out that by the time a product is sold, often very little is left in hand. The noose around the neck has tightened with the rise of quick commerce platforms, where visibility is essential, but it comes at a steeper cost with platform fees shooting off to 50%.

A look into the fee economics of ecommerce and quick commerce will help better understand the maladies of platform fees.

Level Playing Field Or Profit Sinkhole?

The rise of ecommerce giants like Amazon, Flipkart and Meesho have levelled the playing field for millions of small and medium enterprises (SMEs) and startups, throwing open to them a market run by the world’s second-largest online shopper base with disposable incomes set to exceed INR 3.19 Lakh by the time India turns 100, aided by a burgeoning

© Inc42