E-Commerce in India

e-Commerce in IndiaGrowth Prospects

Overview of the industry Category wise Market Penetration Market Trends Market Potential Competitive

AnalysisValue Chain

Analysis

The e-Commerce sector in India has grown by 34% (CAGR) since 2009 to touch 16.4 billion USD in 2014. The sector is expected to grow 35 billion USD by 2017

$ 35 Bn2017(E)

$ 5.3 Bn2010

Asia-Pacific emerged as the strongest business-to-consumer (B2C) e-commerce region in the world in 2013

• Sales of around 567.3 billion USD, a growth of 45% over 2012• Ranked ahead of Europe (482.3 billion USD) and North America

(452.4 billion USD).

India’s internet penetration with totale-households at 46 million against China’s 207 million is one of

the reasons behind India’s poor B2C sales growth.

• The US, UK and China together account for 57% of the world’s total B2C e-commerce sales in 2013 with China having total sales of 328.4 billion USD.

• As against this, India had sales of only 10.7 billion USD.

2009 2010 2011 2012 2013 2014 2015E 2016E 2017E0.3 0.6 1 1.5 2.3 3.5 6 10.6244306418219

19.7743457542647

3.8 5.3 8 9.5 12.616.4

21.3

27.5

35.4

India e-Commerce and eTail

eTail e-Commerce ( Including eTail)

2012 2013 2014 2015(Est.) 2016(Est.) 2017(Est.)0%

10%

20%

30%

40%

50%

60%

70%

80%

Online travel sales volume in India from 2012 to 2017Source: eMarketer


AnalysisValue Chain

Analysis

• Currently, e-Travel comprises 70% of the total e-commerce market.

• It has been observed that online travel sales are maturing in most of the major economies. Same trend is observed in India as well.


AnalysisValue Chain

Analysis

By 2020, eTail in India is expected to account for

3% of total retail.

Orders per million are expected to more than

double from five million in 2013 to 12 million by

2016

it is still miniscule compared to the figure

in China, where the share is 8-10%.


AnalysisValue Chain

Analysis

M-Commerce

There is a traffic torevenue gap on

mobile e-commercein India

Sources: Accel estimates, Accel portfolio

companies, CNNIC and other industry sources


AnalysisValue Chain

Analysis

Women Shoppers – A Growing Force

• Working women segment grew 43% in 2013 and constitutes nearly 10% of Active internet users in India according to i-Cube & IAMAI• Categories like baby care, home décor, jewellery etc. have traditionally been influenced by women decision makers. As more choice become available more women are shopping online.

Sources: Accel estimates, Accel portfolio companies & comScore


AnalysisValue Chain

Analysis

• A significantly low (19%) but fast-growing internet population of 243 million in 2014 is an indicator of the sector’s huge growth potential in India.

• It is evident that in absolute terms India’s internet users are short by only 36

million as compared with 279 million in the US.

High Scope For Internet Penetration

• In coming years, as internet presence increases in rural areas, rural India will yield more e-commerce business.


AnalysisValue Chain

Analysis

Sources: Accel estimates, NSSO, Facebook

Young India Will Become Dominant Presence In E-CommerceYoung Indians (19-24yrs) are more comfortable with online services e.g. FB and thus couldpotentially add up to 40M new shoppers in next 3 years – if we just take the Facebook users


AnalysisValue Chain

Analysis

Major difference between various companies is the way they maintain their inventory, Whilst Flipkart follows the inventory led model, Amazon India and Snap deal, the other two major players follow marketplace model.

Flipkart (inventory-led model)

• It started with a consignment model where goods were procured on demand

• And turned into inventory e-retailer supported by registered suppliers

• This provides better control on the logistics chain.• Manages a fine balance between inventory and cost of

delivering goods.

Amazon India (marketplacemodel)

• Amazon started practicing the market place model by launching its site in early 2013 in India.

• It started registering electronics goods sellers and ended FY 2013 offering nearly 15 million products.

• Known for its strong last-mile delivery network• Amazon India has set up a logistics arm named Amazon

Logistics and started offering same day delivery.

Sources: ASSOCHAM India, PwC | Forbes India, Jun 24, 2014

E-products/Services Software Platform/Tech tools

Payment integration

Logistics & Fulfillments

Customer Service and CRM

Every e-commerce company has to evaluate itself on various parameters. These parameters are as diversified as of the conventional Value chain analysis on one hand. On the other hand it would also has to take care of some specialized instruments as depicted in the above diagram.

Indian e-commerce industry is still in the inception to growth stage, so most of the companies make negative margins on each product that they sell.

All companies are innovating on all the primary and support activities for their firm, to reduce their losses, but due to fierce competition, all major firms are still loss making.


AnalysisValue Chain

Analysis

Recent Investments in India e-Commerce With the new government policies, Investors aggressively funded the e-Commerce sector due to strong growth prospects. Apart from the existing business segments, newer segments such as grocery, food service, jewellery, healthcare were also trying to ramp up the industry in a robust way.

Innovative young ideas and untapped segments will continue to attract investor interest in e-Commerce sector. The focus mainly on service providers, companies involved in support functions ranging from delivery, logistics, and payments with investments largely driven by the relatively lower valuations and smaller amounts of capital required.

Documents

E-Commerce in India