on the Platform

FIGURE 5.7 Product Statistics, Formal and Informal Firms, First Three Years on the Platform

Sources: Administrative data on transactions and business and entrepreneur characteristics associated with a partner firm website; data at CPhS (Consumer Pyramids household Survey) (dashboard), Consumer Pyramidsdx, Centre for monitoring indian Economy, mumbai, https://consumerpyramidsdx.cmie.com/. Note: The figure shows the average number of products by month on the platform among formal and informal firms.

of products offered grows steadily among both formal and informal enterprises, so that, even after one year on the platform, formal firms still offer a larger product variety than informal firms.

SALES STABILITY

So far, the analysis has revealed that both formal and informal businesses are able to grow their sales and revenues through an e-commerce platform and that informal businesses perform better in terms of sales and revenue per employee. In addition, the results document that experience on a platform is another key predictor of how effective firms are in increasing their sales through online channels.

If online sales channels are to serve as a source of business growth, another important aspect to consider is whether online sales are a sufficiently large and stable source of income to support the revenue base of small businesses. To address this question, the study first defined two additional variables based on the transaction data. The first of these outcomes is the number of months in which a business was registered on the e-commerce platform but recorded zero sales. The second outcome measure is the ratio of months with no sales to total months on the platform for each firm in the sample. Figure 5.8, panel a, plots this variable. The figure shows that the share of months with no sales was below 20 percent for about 65 percent of the firms in the sample, and 40 percent of the firms in