Understanding Total Cost of Ownership (TCO) in ecommerce and its impact
Ecommerce has significantly grown in India, and more importantly, has the potential to grow even further in the next 5-10 years. To quantify this with numbers, India's Ecommerce B2C (Business to Consumer) business volume is expected to be $135 billion, in 2024, from an expected number of $ 113 billion in 2023 and $105.0 billion in 2022. This would be a suggested growth of 19.5 %, in just one year. This growth has resulted in tremendous curiosity and excitement, around ecommerce, from small and medium businesses, to be part of this journey.
That being said, many small and medium businesses have already tried their hands in the ecommerce journey. Unfortunately, they have been largely dismayed, with most not even recovering their original investment and some planning to exit ecommerce, due to lack of sufficient returns.
As suggested above, we have a paradox here, where e-commerce as a sector continues to flourish, while a significant portion of small and medium businesses continue to struggle in this space. It is in this paradox that it might be worthwhile to understand the concept of the Total Cost of Ownership (TCO), and how it impacts businesses in ecommerce. For the context of this discussion, we will focus on the B2C segment only for now.
