on the Platform

sells in 34 more postal codes and two more states than the average informal firm with similar characteristics (p = .054 and p = .001, respectively). However, there are no differences in the growth rate of geographical market reach between formal and informal enterprises (columns 6 and 12). Experience is a strong predictor of the geographical market size served by a business. Having one additional month of experience on the platform is associated with selling to customers in an additional four postal code areas (p < .001).

Figure 5.9 shows that the number of postal codes with sales grows steadily during the first year of a firm’s presence on the platform among both formal and informal businesses. In the first month, formal firms sell, on average, in about 30 different postal codes, while informal firms sell in about 15 postal codes. After one year on the platform, these numbers increase to 150 and 115, respectively. These results indicate that both formal and informal firms are able to expand their markets through e-commerce and that this expansion occurs steadily, rather than discontinuously, mainly during the first year in which a business is active on the platform.

FIGURE 5.9 Postal Codes with Sales, 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 postal codes (pin codes) with sales by the number of months of presence on the platform among formal and informal businesses.