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GROUND ZERO 4.0
22 January 2021 | Event Report

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About RedSeer
RedSeer is a leader in the Internet and new-age advisory. Over the last 12 years of our operations,
we have advised over 300 clients across the breadth of the Internet and investment industry in
India, Middle East, and Southeast Asia. Our advisory is differentiated through our high-quality IP
of market insights and research, which is unparalleled in the industry and helps both corporate and
funds make the right choices. With more than 200 consultants across 5 offices, we have emerged
as the largest home-grown consulting firm in India. Also, we were the #1 Private Equity Deal
Advisor in 2020.
About Ground Zero
Ground Zero is the go-to platform for investors, entrepreneurs and business leaders for accessing
high-quality and in-depth insights on the Indian Internet space.

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Table of Contents
Preface 4
Executive Summary 5
Digital India | How to build for Scale – Learning from Nandan Nilekani 8
Digital India | Looking Back on the Past Decade and the Year 2020 9
Retail | Preparing for the Digital Scale 19
Grocery | The Search for the Right Channel Ends Here 30
Education | Edtech Everywhere for Everyone 42
Health | Taking the Digital Pulse 50
Building Homegrown Brands for Global Scale 62
Event Moderators 64
RedSeer Team 65

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Preface
India has been one of the fastest growing markets globally and with the internet penetration
reaching the hinterland, the scope for new-age companies in India is endless. 2020 has been an
eyeopener to show us the vast scope that is still remaining unexplored and how far and wide the
impact of digitization can be.
With the pandemic, digital adoption has been faster among consumers and brought in a paradigm
shift in the consumer behaviour thus changing the growth trajectory of many startups and making
them pivot as well. Today, convenience, trust plays a more important role for the consumers which
are the major reasons that many are preferring to shop online starting from groceries to clothes.
If anyone would have suggested this trend becoming mainstream in consumer behaviour a decade
back, it would have seemed next to impossible but today after facing the unprecedented events, all
of it fits perfectly just like a missing puzzle.
Over the years, depending on the market fit startups have evolved and launched new products to
cater to the market needs. Moving forward, we definitely will see more startups filling the gaps
and bringing in new strategies that will play a key role in catering to the consumers.
Through this Ground Zero Series, we make an attempt to bring together the sector experts to
identify the trends and discuss the overall needs of the market and the opportunities that lie ahead.
This edition of Ground Zero Series brings together the leadership of various sectors like edtech,
grocery, retail, health, homegrown brands and what the changing consumer behaviour means for
the businesses in the long run. For any queries or feedback, please feel free to reach out to me.
Anil Kumar
Partner & CEO
anil@redseerconsulting.com

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Executive Summary
The report is compiled of all the topics that were discussed at Ground Zero 4.0 and has been
segregated based on RedSeer’s research and panel inputs.
Key Findings
1. Digital India
The consumer economy was strongly hit by the pandemic which resulted in changing
consumer behaviour, spending and much more. The changes varied from one sector to
another. While sectors like edtech, e-grocery, overall e-tailing, ehealth got a strong boost,
sectors like mobility, foodtech, travel on the other hand is still recovering from the major
hit. The digital economy clocked $80 billion in December CY20 in terms of Gross
Merchandise Value with a swoosh shaped recovery with rise of Bharat customers,
increasing customer satisfaction and better unit economics.
2. Retail
Retail has suffered post COVID but is almost back to pre-COVID levels. RedSeer’s
research shows that the market size dropped from $906 billion in 2019 to about $780 billion
in 2020.
The retail segment saw a huge consumer behaviour change led by the pandemic. While
initially the market dropped, it showed resilience and a V-shaped recovery. Overall, the
sector has undergone significant changes as offline brands started making an online
presence, omnichannel played a major role during the crisis, brand partnerships took off to
cater to the needs of the customer. Customers on the other hand, were looking at more
convenience, hygiene than pricing which used to be the drive for online shopping.
3. E-tailing
Strong festive season saw 66% y-o-y growth in sales driven by small city customers and
set the stage for a successful CY20 and beyond for e-tailing. Further, high consumer
satisfaction and retention (in CY21) as per our surveys is expected to drive India’s $ 38 Bn
e-tailing market (CY20) to $140 billion GMV by CY25.
Online native brands are now ~30% of India’s online retail and will grow to $ 60 billion
by CY25.

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Social commerce is expected to grow to ~5% of e-tailing or ~$7 Bn opportunity by CY25.
India’s eB2B market is set to grow from $4.5 Bn in CY20 at a CAGR of 77% to reach
$80+ billion by CY25.
4. eGrocery
The GMV of the eGrocery market in India stood at $3.3billion in CY20 and is estimated
to grow 8-times in the next 5 years. The market has grown 60% from CY20 and is expected
to grow 41-49% by CY25F.
eGrocery saw a massive growth with the number of new households adopting it.
Its scale is projected to reach 1.2-1.4x of pre-COVID estimates in CY25. eGrocery
adoption in Bharat markets will hold the key for the sector’s growth in the long run. Both
the vertical players like BigBasket, Grofers along with horizontal players like Flipkart and
Amazon are poised to have a strong play.
Besides, out of the huge ~$300 billion untapped addressable opportunity for eGrocery,
more than 60% is led by value-first households. The ‘value-first’ segment refers to the
households in India, for whom affordability is the key pain point and hence buying low-
priced grocery is of the utmost importance. This segment will grow faster than the eGrocery
market and cover ~55% of the eGrocery business in 2025.
5. Education
EdTech Market expanded ~2.5x to reach ~$850 Mn in CY20. Paid user adoption increased
~2.6x driven by Covid led school’s disruption and penetration in lower city tiers.
The ecosystem has matured over the years but with Covid, the growth accelerated as more
investments were poured into the sector and players like Byju’s and Unacademy along with
others have launched an array of offerings to fill the gaps in the market.
Although it received a major boost and expects to see a huge growth in the coming years,
it still has a number of challenges like accessibility to devices, strong internet connection
in the hinterland, digitization adoption in schools among others.
6. eHealth
India's ehealth sector reached about $1.4 billion GMV in 2020 with platforms like
Pharmeasy, Netmeds, 1mg and Practo, among others leading the space. Moreover, eHealth
is expected to grow 10x in the next 5 years to reach GMV of $11-15 billion.

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As a result of the pandemic, the stakeholders of the ecosystem like players, medical
professionals, regulators have realised the importance of digitization in the sector. During
the lockdowns, the general public relied on e-consultations, online medicine delivery,
online scheduling of medical tests which increased the adoption. Overall, the sector has
been successful in penetrating deeper and onboarding new users and at the same time retain
a lot of their new users.
The sector has seen more players foraying into the space along with more consolidations.
Further, there have also been changes in strategies, for instance discounting dipped as
adoption increased.
7. Homegrown Brands (D2C)
Online first brands gained 30% share of eCommerce which will grow to 45% by 2025.
Direct-to-consumer (D2C) and DNB brands are now driving much of the eCommerce
growth in India, according to RedSeer’s research.
Over the last few years homegrown brands including D2C and DNB brands have clocked
prolific growth. While the brands have seen many challenges, verticals are seeing more
user growth as a result of more awareness, access and product offerings.

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1. Digital India | How to build for Scale – Learning from Nandan Nilekani
Covid-19 has profoundly accelerated digital adoption in India, and
at the same time changed the consumer perception forcing new-
age companies to adapt and deliver during the most unanticipated
challenging times.
Talking about this, Nandan Nilekani said that today demand has
gone from push to pull due to which customer acquisition cost is
dwindling.
From edtech and healthtech to grocery shopping, Covid has changed consumer behaviour who are
now adapting online channels to resolve their problems. Furthermore, Nilekani stressed that with
Government directives and actions on digital payments starting from demonetisation then UPI,
Bhim app, it led to a rise of demand. Nilekani said that India is still largely an under-banked
country, though 80% of the population has access to bank accounts they do not have access to
credit.
Commenting on neo-banks, Nilekani said, “There is absolutely a role for neo-banks which are very
focused on some particular markets, which provide a great consumer experience which hides the
complexity of banking for the consumer, there is a huge role for that. But also remember in India
in particular, a lot of technology has been created at population scale. Those opportunities are not
going to be there for startups because they will be provided by national digital platforms.
Therefore, neo-banks have to be much more focused on the consumer side, that the target market
of what you are doing will create such a fabulous user experience that there is no need to go to a
conventional bank.”
Answering whether optionality comes at the cost of focus, Nilekani said AB testing is still
necessary. “If I’m a company with only physical stores and no pickup/delivery models – my
business completely shut down in pandemic. Companies with a digital presence have always done
better – hybrid or online only company. Optionality varies in sector – but needs a stress test of
business if something goes wrong – e.g., natural crisis, flood, tsunami, pandemic – will my
business still manage? – more about situational mind game”
Commenting on the role that big tech like Wipro, Infosys etc play in startup culture in India,
Nilekani said three major roles: “As an investor – Infosys has investment funds for tech startups.
It acts as a bridge or way to the marketplace – Infosys works with 2000 top companies which all
want to know what is happening in the Startup world. Large projects all over the world – APIs to
hook in to use resources – act as digital infra enabler.”

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2. Digital India | Looking Back on the Past Decade and the Year 2020
2.1 RedSeer’s View
2020 has been an unprecedented year which hit the overall consumer economy. However,
gradually a lot of the sectors recovered though with a 20% dip. The travel and stay, however, still
has not strongly recovered.

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In India, the digital economy showed a swoosh shaped recovery. Sectors like egrocery, content,
edtech strongly gained at the back of the pandemic while foodtech, mobility got badly hit. The
economy clocked $80 billion in December CY20 in terms of Gross Merchandise Value.

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The growth for parameters that fundamentally leads to the growth of the digital economy including
access to internet, internet users, online services users and shoppers, as per Pre-Covid forecast has
been on the right path. This shows that the consumer funnel did not change fundamentally, the
behaviour has vividly changed.

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The pandemic led a mass consumer behavioural change which had an impact across sectors.
eGrocery saw a rise of 1.3x in terms of annual transactions while foodtech saw a rise in the average
order value. Additionally, there has also been a growth of 1.1x in annual transactions per e-tailing
customer. This clearly indicates the strong recovery of the digital economy.

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As reflected throughout the year, small city consumers are driving the next growth wave of online
commerce with 1.5x growth in users from non-metro cities. 45% of the users in 2020 hailed from
non-metro cities while 50% of the users were from tier 2+ cities.

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In a significant change in the perspective of a consumer, experience for the first time dominated
even over price which has been a crucial criterion for the Indian consumers over the years.

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A rise in the NPS score across sectors majorly due to price and convenience, gives a positive
outlook as this shows consumer sentiments and promises stickiness in the long run.

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Overall, consumer spending is expected to increase in sectors including edtech, eGrocery,
foodtech, eHealth as the digital adoption increases.
The pandemic overall has given a tremendous boost to the digital economy which gradually led
startups to onboard new users, thus improving their unit economics. The result shows that along
with the recovery, the startups are set on a steady path for the IPO.

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2.2 Panel View
Panelists
• Mukesh Bansal, Co-founder & CEO, Cure.fit
• Umang Bedi, Co-founder, DailyHunt
• Visheh Shrivastava, Managing Director, Temasek
• Vivek Sunder, COO, Swiggy
India’s consumer internet economy showed strong resilience in 2020. The overall gross market
transaction value dropped earlier last year due to the pandemic but recovered by the end of the
year.
Trends of 2020
The panel discussed how a plethora of micro-trends emerged in 2020 led by the unprecedented
lockdowns and pandemic.
Vivek Sunder highlighted a few that he observed in Swiggy.
“There are many micro trends – both reversible and irreversible.
In March (2020), consumers saying ‘nothing will get in my home
– even food from outside – will give me covid’. In Delhi, due to
1 delivery boy, sales of pizza dropped 50% very quickly in that
region.
Now consumers are ordering – I need to celebrate, and acceptance grew and grew. Lot of reverse
migration happened– 22% of Bengaluru consumers went back home – and so targets of business
units in the small cities went up and Bengaluru’s went down. This trend might semi-undo itself
with partial work from homes. Ambience based restaurants came into food delivery in 2020 – 5
stars, etc. – that won’t go away. They will continue selling on platforms like Swiggy.”
He added that Swiggy also partnered with the Government to bring street vendors online – over
30k vendors in 120 cities have come onboard who will stay online.
The panelists echoed the sentiments that there is no playbook for 2020 and it varies from one case
to another.

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“In terms of content – adoption has increased – active internet
users have gone up 100 million in 2020 alone – with altogether
over 500+ million users now. We are now the 2nd
largest content
consumption market. Content is from purely social to really
persona. OTT, IM, lean back experience, short form time spent has
gone significantly up compared to traditional social media. It has
been a very cluttered content environment this year,” said Umang
Bedi.
The panel also noted that 2020 showed how big a role non-metro
city played a part in businesses. Vishesh Shrivastava said a high
number of transactions happened this year of which a large part
was coming from non-metros, for the first time. “Metros are the
compilation of many demographics – New York sort of
demographic as well as a tier 4 city demographic. All companies
that went to serve tier 3, 4 towns – cost of delivery more than
compensates for lower AOVs. Highly more profitable than
metros. Doesn’t make sense for any business to be a tier 1 but not
tier 3 or 4 business,” he said.
Mukesh Bansal said, “Comfort of a digital experience is very
important now. Accessibility to online services is easier,
irrespective of all demographics and hence digital experiences will
become an integral part of life.”
Role of the Government
Furthermore, the panelists commented on the regulatory front saying that the government should
work in partnership with Startups and not act as a barrier. The government should unlock the flow
of domestic capital into digital, improve ease of operations and cost of operations for digital,
facilitate an open API system and unshackle centres of higher education online.

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3. Retail | Preparing for the Digital Scale
3.1 RedSeer’s View
Retail has suffered post Covid but is almost back to pre-COVID levels. RedSeer’s research shows
that the market size dropped from $906 billion in 2019 to about $780 billion in 2020.
While the sector saw a drop from CY19, it has recovered stronger with more penetration across
categories and retaining users on the platforms.

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2020’s festive season clocked $8.3 billion GMV, a growth of over 50%. This was mostly led by
new shoppers this time unlike the other years and a rise in the tier 2 shoppers. This indicates the
deeper penetration of the online players which has also been a major reason for faster recovery.

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While overall there has been a step rise across categories in online penetration. Categories like
mobiles, electronics, home and fashion have seen a significant increase in this parameter.

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A stark contrast from the other years, tier 2+ shoppers were >50% of the online user base for the
first time in 2020. This is due to a number of factors like reverse migration, users adopting
digitization, more awareness among others.

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With the Covid boost, e-tailing is expected to reach $140 billion GMV and 11% of retail by
CY2025F which is a 30% CAGR growth from CY21F.

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Over the last few years, social commerce has been emerging as one of the significant areas of e-
tailing. While social commerce resellers more than doubled in CY20, compared to CY19, social
commerce suppliers grew from 30k to 50k.

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Direct-to-consumer and digitally native brands also saw an exponential growth in 2020 and now
accounts for 30% e-commerce sales.

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Adding up these facets, it can be concluded the non-traditional e-tailing models will see stronger
growth in CY21. These channels include omnichannel, social commerce, D2C brands, horizontals
and verticals.

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The above chart represents the category vs the channel and how will it look like in a CY25 state.
While we expect horizontals to continue leading in most of the categories, omnichannel and D2C
have been gaining grounds and we expect these channels to account for a rising share by CY25
across categories especially in fashion, grocery and beauty (included within others).

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3.2 Panel View
Panelists
• Govind Shrikhande, Former MD, Shoppers Stop
• Shailesh Chaturvedi, MD & CEO, PVH Brands at Arvind Group
• Vineet Gautam, CEO, Bestseller India
The panel largely discussed how severe an impact Covid and the lockdowns made on fashion retail.
While there was hardly any business in April, normalcy started returning around August. The
experts identified that while consumer behaviour changed during the pandemic, home related
categories, casualwear, leisurewear performed better.
The panel also highlighted how omnichannel has come into the limelight. They stressed on the
idea that omnichannel although is not easy, has shown many brands the significance of it during
the pandemic.
“Omni channel has become a holy word now for everyone as a
way forward - people view omni the same as O2O which is not
right. Brands look at examples from an Amazon-led retail market
in the US where Nordstrom has done well (on the omni front) and
John Lewis in the UK. However, India is a marketplace-led model
similar to China. Brands should look at doing online only first and
make it right and then move towards omnichannel. Omnichannel
has multiple channels - one of them being online only. Build tech
stacks one by one to expand channels and that should be the way
forward.” said Govind Shrikhande.
Commenting on the rise of value consumers, Shailesh Chaturvedi
said stronger brands have held consumers and recovered faster
but no significant segment shift has happened.
Adding to this, Vineet said that a lot of unorganized has moved
to organized – this is where Value formats have been better.
In the post-Covid world, the experts expect that discounting will drop while convenience will
become the biggest priority along with trust. Tie-ups between online and offline will be another
important trend.

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“Industry is moving towards reduced lead time – a lot of efforts to
improve response times, etc to make more efficient supply chains.
Brands which offer great comfort and safe environments in stores
will continue. Nearby sourcing will be a larger trend – reduce lead
times as well. Production will move away from China to India,
Bangladesh, Vietnam but India will definitely benefit,” said
Vineet Gautam.

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4. Grocery | The Search for the Right Channel Ends Here
4.1 RedSeer’s View
One of the biggest beneficiaries of 2020 has been eGrocery which saw massive adoption as a result
of the pandemic. The market extensively grew and saw new users joining platforms while a number
of players also forayed into the space during the crucial time of lockdowns.
The sector has grown in terms of GMV from $1.9 billion in CY19 to $3.3 billion in CY20. With
horizontal and vertical players focusing on the segment, it is set to see a significant growth in the
coming years. Some brands have seen a major growth due to the adoption of eGrocery. Brands
like Dabur, ITC, Nestle, Britannia among others is leading the eGrocery space when compared to
the rest.

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According to Pre-Covid forecast, there has been 2x household growth in CY20 from CY19. 10
million households were retained from last year while another 13 million households were
onboarded.

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To add, another positive change that players saw was the increase in average order value by the
consumers in multiple categories like Stock-ups, non-daily top ups and daily top-ups. Additionally,
packaged products, superior brands, exotic products saw more demand.

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With the increased adoption, it can be expected that it will continue. Few of the major drivers will
be quality of products, hygiene, availability of products and new users from non-metros.

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With the maturing of the segment, both vertical players like BigBasket, Grofers, JioMart among
others and horizontal players like Flipkart and Amazon will have a key role to play.

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As the market showed tremendous growth, it also improved its unit economics with more
adoption, providing better supply chain issues than offline, reduced discounts bringing in more
reliability.

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Furthermore, our report ‘India eGrocery - A promising opportunity led by value-first users’
launched at the event shows that out of the huge ~$300 billion untapped addressable opportunity
for eGrocery, more than 60% is led by value-first households. The ‘value-first’ segment refers to
the households in India, for whom affordability is the key pain point and hence buying low-priced
grocery is of the utmost importance.

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Further, it has been seen that customers are willing to buy more private label products for hygiene
and affordability in key categories including fresh staples and packaged foods.

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This segment will grow faster than the eGrocery market and cover ~55% of the eGrocery business
in 2025.

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With the Covid boost, eGrocery is expected to grow 1.2-1.4x of pre-Covid estimates in CY25.
More importantly, the sector has grown 60% from CY20 till CY21F. The value-first customer
segment will play a key role in the overall growth of the segment.

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4.2 Panel View
Panelists
• Albinder Dhindsa, Co-founder, Grofers
• Amit Sharma, Founder & CEO, ShopX
• Sourjyendu Medda, Founder, CBO & CFO, Dealshare.in
The panel started with new strategies that will pan out in the post-Covid world. Starting from value
vs convenience consumers, dependence on offline, B2B procurement, were few of the highlights
that panelists said did play a major role in India.
During the discussion, Albinder Dhindsa said that consumers will not view online as different to
offline, but the first question is how to make the economics of online work for customers.
“We are still extremely early in the journey although Covid
accelerated the adoption of e-grocery. What has happened in two
months would have taken 2 years to test and mix and match to
work out in a normal world. Value needs to be determined by your
offering and not just give things cheap. There are already 20-30
egrocery models – including new sort of digitized kiranas. It all
depends on the local preferences and how to make the economics
of it work,” he added.
Commenting on how to adapt to the changing consumer
preferences, Amit Sharma, Founder & CEO, ShopX said, “I
believe deeply in the notion of value retailing. The consumption
that will be 5 years from today, does not exist today. We will see
massive consolidation of price-value combinations. One of the key
things to get right is substitutability framework – depends on
category.”

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Further, Sourjyendu Medda, Founder, CBO & CFO, Dealshare.in,
said, “If you look at the middle-income segment, grocery is more
than 60% of the consumption basket. You need to crack this basket
quickly as it has huge potential. Value for Dealshare was
quality/price.
This takes away brand preferences. Make the platform a brand to
make consumers believe in the product offering.”

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5. Education | Edtech Everywhere for Everyone
5.1 RedSeer’s View
Edtech saw massive growth after the pandemic. As schools and colleges shut and professionals
were being laid off, online courses saw huge growth during the time. While the adoption among
different demographics has been humongous, retention will become a key to succeed in the market.
The growth of the sector can be validated through the surge in investments in this sector in CY20.
The sector clocked a total of $1,881 million funding in CY20 compared to $652 million in CY19.

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The sector saw a triple digit growth in 2020 in both paid users and revenues. While the paid user
growth touched $5.8 in CY20, the revenue grew up to $854 million.

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The major drivers for the NPS improvement were accessibility, free content, convenience, live
tuitions and learning outcomes. Besides, there has been an overall increase in user engagement
and more willingness to pay.

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Overall, the edtech sector looks quite bullish with more adoption in schools, online higher
education opportunities, extra-curricular offerings, international expansion and B2B edtech
offerings.

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Two key players in the sector that is Byju’s and Unacademy have pioneered two large ecosystems
in the sector covering multiple facets of the sector and catering to the large market through their
diverse offerings.

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The K12 edtech market is expected to grow 60% y-o-y and reach 7x of its current scale by 2025.
With lifelong learning becoming a key to succeed in careers, this market is expected to grow about
10x in the next 5 years.
Our research shows that another key segment which is likely to grow is the extracurricular
segment. It is estimated to clock $0.6 billion by CY25 which is 6x growth led by new hobby-based
offerings.

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5.2 Panel view
Panelists
• Ashutosh Sharma, India Head – Investments & M&A, Prosus Ventures
• Prasanjeet Dutta Baruah, Business Head – India, Facebook
• Siddharth Nautiyal, Investment Partner, Omidyar Network India (ONI)
• Tanya Sen, Investment Manager – Head of Education, Sofina
The panel discussed how Covid led to a behavioural change among edtech users. It was not a mass
experimentation anymore but the only way to keep learning.
“Consolidation has been active this year. Profit pools and needs
are large in this market. But there will be very large and enough
opportunities for new entrepreneurs. Tier 3 can do the same course
done by Tier 1 and Metro city people because of EdTech access.”
“No one is taking care of the in-school market where a scalable
model is yet to be seen” said Tanya Sen.
She added, “There are 3 types of markets in edtech:
1. Same audience, new services – these guys are leveraging the CAC in expansion.
2. Same services/products but expanding to new audiences - Coursera, Brainly,
Udemy.
3. New audience and new skills – easiest for them to enter in the market.
Few of the challenges that the panel highlighted were access to devices, content, adoption in
educational institutes, expanding beyond tier II and III cities.

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“Vocational training, reskilling/upskilling – 260mn students in
EdTech. Everyone cannot pay the same price, does not have the
same affinity to tech, cannot speak the same language.”
“The analogy that I see with commerce – Amazon, Flipkart and
then new models coming in group buying, reseller base. It is such
a large market that it cannot be led by 2-3 companies” said
Ashutosh Sharma.
Commenting on acquisitions and mergers in the edtech market,
Siddharth Nautiyal, said, “Consolidation has been active this year.
Profit pools and needs are large in this market. But there will be
very large and enough opportunities for new entrepreneurs. Tier 3
can do the same course done by Tier 1 and Metro city people
because of EdTech access. No one is taking care of the in-school
market where a scalable model is yet to be seen.”
Prasanjeet Dutta Baruah, added, “Facebook is an efficient way to
reach relevant TG across the globe.”
“You have the content and you just need to broadcast it.”
“No infrastructure needed to go global. We are working on a
program to work with schools to ensure that the CACs are in
control.”
The investors in the panel added that they will be looking at areas like Workforce development,
employability, lifelong learning, rise of skills over knowledge, EdTech SAAS products and
reskilling.

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6. Health | Taking the Digital Pulse
6.1 RedSeer’s View
2020 has been a prolific year for the adoption of e-health. With multiple players entering the space,
the sector is definitely set to see some tough competition ahead.
The eHealth sector grew with an expansion of 1.7x increase in household user base. While 8
million households were retained from last year, another 9 million households were added.

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More importantly, there has been a consumer behaviour shift in the sector. People preferred
convenience especially after the pandemic and factors like safety and hygiene, consultations with
doctors, medicine delivery came to everyone’s rescue during the crisis.

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The space saw new entries like Amazon and Apollo while a few major consolidations with Jio
acquiring Netmeds and PharmEasy acquiring MedLife.
While the space is seeing multiple players now with different strategies and catering to different
needs, it will be interesting to watch the space as to which models win in the long run.

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Covid changed the perception about eHealth and has brought it to the limelight highlighting the
significance of it. With the Government entirely supporting the ecosystem, the regulations look
favourable for the sector in the time to come.

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Further various stakeholders of the ecosystem have understood the significance of eHealth. While
healthcare professionals are adopting eHealth, partnerships, consultations and other platform
offerings have seen more adoption.

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This change in the outlook of the consumers driven by convenience, discounts, additional services
give a positive indication about the sector and sustained growth in 2021.

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This overall will significantly drive the growth of the sector and our estimates show it to grow
about 10x over CY 20-25 which is about $11-15 billion GMV by CY25.
With the boost that the sector received, the unit-economics of the sector greatly improved. Further,
with the positive change in the consumer behaviour, there has been a drop in discounts, and
significantly improved contribution margin along with a drop in CAC.

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The sector reached about $1.4 billion GMV in 2020. With Amazon and Apollo entering the space
and consolidations like Jio acquiring Netmeds and Pharmeasy merging with Medlife, this space
has definitely matured and is set to grow tremendously in the times to come.

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Omnichannel, here also looks like the next big opportunity which can be estimated to be around
$1.5 billion by CY25. The players, however, should focus on acute-first customers. The omni
channel play could add the touch & feel and faster delivery aspects, currently unavailable in
eHealth. As s result, omni-channel eHealth could play a significant role in resolving the unmet
needs of the acute-first households.

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6.2 Panel View
Panelists
• Ashish Ahluwalia, Co-Head, Direct Equity – Healthcare, Consumer, Food, Education,
CDC Group
• Gaurav Agarwal, Co-founder, 1mg
• Sridhar Sankararaman, Managing Director, Multiples Alternate Asset Management
• Vivek Srivastava, CEO & Board Member, HealthCare at Home (HCAH)
The panelists highlighted that due to Covid, it has been realised that digital can solve problems for
healthcare as well which is also being accepted by the public.
With every facet of healthcare relying on digital platforms, the stakeholders realised the
significance of it in the healthcare ecosystem.
“The business demand was about 25-30% higher month-on-month
every month and almost 70-80% of that demand has actually
stayed with us. But the diagnostics business was affected as people
were wary of someone coming to their house for drawing a blood
sample. But there was so much pent-up demand because
healthcare is necessary. Once the lockdown eased up and people
got comfortable with the safety protocols, even the diagnostics
business is 50-60% higher than what it used to be in pre-covid
times.”
“So, a lot of recovery has happened and most of it has sustained, like 70-75% has sustained and
it’s actually very healthy,” said Gaurav Agarwal.
Overall, all the players have seen a surge in users and have been successful in retaining a major
share of their users although the offline market opened up.
“Our respect for the people working in the ecosystem, both
digitally and physically, has increased immensely.”
“Kudos to people who have kept the wheels moving and delivered
healthcare in such times,” said Ashish Ahluwalia.

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Shridhar Sankararaman commented on the challenge across the
industry, saying, “The biggest challenge in the industry is that
gross margins are low across the platter. Because willy nilly there
is comparison between what is available offline vs online. So, if
the offline chemist gives you a 10% discount, you have to have a
15% or even 20% discount when starting online. If a doctor is
charging you Rs1,000 for an OPD consultation, the doctor gets Rs
850 and hospital gets the rest, same happens online, so the margins
are low. The spread in each of these verticals is fairly small and
the cost of acquiring the customer is really high.”
Commenting on digitization in overall healthcare, Vivek
Shrivastava, said, “We were doing a lot of covid testing, so there
was a significant increase on the lab testing front. And with people
thinking if each and every aspect of healthcare could be brought
to their home, we also saw a dramatic increase in the enquiries.
Since people were confused as to what they should do even if they
had a cough or cold, which normally would just be dealt with by
self-medication or visiting the nearest clinic, but now those
standard processes or protocols were broken.”
“That’s when people, including corporates started coming to us and we offered services right from
consultations to diagnostics.”
“We handled about 3 lakh covid patients at home, so this is all consumer digital, and we worked
with the governments of Delhi, Karnataka and Punjab as well to deliver this. So, you can say we
have significantly moved up the ladder on the consumer digital front as well.”
The panel discussed a set of problems that healthcare-focused businesses are trying to solve:
Scarcity, process intermediation, patient outcomes, access.
1. The problem of scarcity: This involves the scarcity of doctors, paramedics and talent. So,
looking at B2C models like telemedicine or B2B models which are focusing on allocating a finite
set of resources. ICU costs in the country are very high, and the trained resources available to
manage ICUs are very low.

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People use AI and data which gives mortality scores to help manage ICUs better. Better resource
crunches in places like haematology, cardiology etc. where people are trying to use data and reduce
the need for doctor intervention or the time they are required.
2. Second is a set of companies which are doing value chain or process disintermediation, making
it more seamless. A number of B2B supply chain companies which are also just doing
disintermediation by reducing and making supply chains to healthcare providers and hospitals
more seamless.
3. The third set of people are solving issues around health and patient outcomes by working with
preventive and primary healthcare. One big theme here are people using data for personalisation
of healthcare. Use of devices and data stored in devices to reach better outcomes through
personalisation and using a combination of healthcare, fitness and nutrition.
4. Businesses solving the accessibility problem by using technology to create access to healthcare
in places where it does not exist or is overpriced.

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7. Building Homegrown Brands for Global Scale
7.1 Panel View
Panelists
• Chaitanya Ramalingegowda, Co-founder, Wakefit
• Ketki Paranjpe, Partner, L Catterton
• Sandeep Singh, Executive Director, Everstone Group
• Shankar Prasad, Founder, Pureplay Skin Sciences
• Sujot Malhotra, CEO, Beardo
The panelists echoed sentiments from the other panels that the significant jump in tier II shoppers
have been unrealistic. The panel discussed how 2020 has led to more experimentation and while
consumers are more aware and asking the right questions, new brands now have more potential as
people are reading more and are willing to try new things.
“Overarching trend of experimentation is driven by few things –
access to the internet, anchoring people as an individual in social
media and not as a group– you as an individual want to have a
certain image. This is driving the BPC product offering. While this
is more common in the Gen Z demographic, it will percolate to
other age groups as well. From an investor perspective, we look
for a large category with large TAM but lower number of
incumbents from new brands,” said Ketki Paranjpe, Partner, L
Catterton.
“Home has now become your school, office, everything. People
have realized that homes are important and not just a place to crash
at night. So, people are moving to make things ergonomic,
economic and also attractive. Home investments have gone up due
to this. For mattresses particularly, people are uncomfortable by
going to stores and trying out mattresses due to perception of high
risk of infection – actual risk is low, but the fear is there,” said
Chaitanya Ramalingegowda.

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Commenting on the way forward for D2C brands, Sujot Malhotra,
said, “Earlier, you would have to go to a marketplace as a D2C to
grow due to lack of infrastructure.”
“Now, you can do both due to 3PLs setting up their own fulfilment
and delivery centres which help us and help the marketplaces. So,
we can use both channels.”
“For companies which are slightly older, native platforms are
better now.”
Echoing similar sentiments, Shankar Prasad said, “We also started
on marketplaces, now our own platforms are doing better. For the
BPC category – the user base is so wide and so frequent;
availability and discovery are things you live by, be it any
platform.”
“As you start scaling, app friendliness, payment options, UI, etc.
we cannot substitute in our category.”
Adding, Sandeep Singh, said, “Couple of D2C brands have tapped
global markets well. If you can recreate the experience of Indian
metros for Indian Diaspora, that’s an interesting thing to think of.”

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Event Moderators
We are very grateful to our moderators without whom the panel discussions would not have been
so riveting and insightful.
Chandra R. Srikanth
Senior Editor
ET Now
Namita Dalmia
Director - Investments
Omidyar Network India
Rachit Parekh
Investments
Accel
Tarush Bhalla
Assistant Editor
HT Mint
Aditi Shrivastava
Assistant Editor
Economic Times
Soumya Jain
Senior Consultant
RedSeer

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RedSeer Team
Anil Kumar
Partner & CEO
Mrigank Gutgutia
Director
Rohan Agrawal
Director
Vivek Pathak
Director
Kushal Bhatnagar
Engagement Manager
Abhishek Gupta
Engagement Manager
Sonali Singh
Manager - Digital Marketing
& Sales
Divyanshu Shrivastava
Associate Consultant
Ojasvin Nagpal
Business Analyst

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