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E commerce industry in india

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E-Commerce Industry in India

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E commerce industry in india

  1. 1. Table of Content Introduction to E-Commerce Industry in India E-commerce Industry: Current Scenario Indian E-commerce Timeline E-commerce categories E-commerce Industry: Key players E-commerce Industry: Classification E-commerce Industry: Growth
  2. 2. Table of Content E-commerce Industry: Apparel E-commerce Industry: pharmacy E-commerce Industry: Recent trends Conclusion E-commerce Industry: Future outlook E-commerce Industry: challenges and issues
  3. 3. Introduction to E-Commerce Industry in India The E-Commerce industry is one of the most progressive sectors of the economy. The e-commerce market has changed the way business is transacted, whether in retail or business-to-business, locally or globally. Despite being a developing country, India has shown a commendable increase in the e-commerce industry in the last couple of years, thereby hitting the market with a boom. Though the Indian online market is far behind the US and the UK, it has been growing at a fast page. Today, the online shopping has become a trend in India and the reason behind the adoption of this technique lies in the attractive online websites, user friendly interface, bulky online stores with new fashion, easy payment methods (i.e. secure pay online via gateways like PayPal or cash-on-delivery), no bound on quantity & quality, one can choose the items based on size, color, price, etc. The Key drivers of Indian E-commerce have been:  Increasing broadband Internet and 3G penetration.  Growing Living standards  Availability of much wider product range  Busy lifestyles and lack of time for offline shopping  Increased usage of online categorized sites  Evolution of the online marketplace model with websites like eBay, Flipkart, Snapdeal, etc.
  4. 4. E-Commerce Industry In India Worth $13.5 Billion In 2014 and predicted that it will Cross $16 Billion In 2015. According to the latest report by IAMAI and IMRB International, the E-Commerce industry in India reached a value of INR 81,525 crore (US$13.5 billion) in 2014. The rapid increase in the use of smartphones and internet services has earned India a place among top 20 developing countries on the global forum, as stated by AT Kearney in its 2014 Global retail development Index (GRDI). Consumer behavior has changed rapidly and visiting a local store to buy a mobile phone is now more of a pain. While Flipkart, Snapdeal and Amazon have been touted as the major players in this industry, the report shows that Travel industry comprised almost 61% of the total E-Commerce market. Similarly, e-Tailing grew by 1.4 times since 2013 taking up almost 29% of the E-Commerce market share in India. 81,525 Cr Digital Commerce 31,475 Cr Online Non Travel 50,050 Cr Online Travel 24,046 Cr E- Tailing 896 Cr Matrimony & Classifieds 2,025 Cr Other Services 4,508 Cr Financial Services Source: IMRB I-Cube 2014, All India Estimates, December 2014 Introduction to E-Commerce Industry in India Continue.....
  5. 5. 0 20,000 40,000 60,000 80,000 100,000 120,000 2010 2011 2012 2013 2014 2015E 26,263 35,142 47,349 53,301 81,525 108,428 Growth of Digital Commerce (INR Crores) Growth of Digital Commerce (INR Crores) Source: IMRB I-Cube 2014, All India Estimates, December, 2014 According to the report was prepared by IAMAI in association with IMRB International. It is estimated that Overall, transactions worth Rs 81,525 crore happened in 2014, which is 53% more compared to 2013. The report estimates that the industry will grow at a rate of 33% in the next 12 months, which makes the overall market to be valued at Rs 1,08,428 crore by the time 2015 ends with 53 per cent growth. Introduction to E-Commerce Industry in India Continue.....
  6. 6. E-commerce Industry: Current Scenario 1Cited from “Internet Usage Statistics - The Internet Big Picture - World Internet Users and Population Stats” available at http://www.internetworldstats.com/stats.htm (last visited on January 22, 2015) 2Cited from “The Indian Telecom Services Performance Indicators (April – June 2014)” available at http://www.trai.gov.in/WriteReadData/PIRReport/ Documents/Indicator%20Reports%20-%20Jun-14.pdf (last visited on January 22, 2015) 3http://blogs.wsj.com/indiarealtime/2014/10/15/mobile-shopping-set-to-dominate-indias-e-commerce-market/ (last visited on January 22, 2015). E-commerce in India is still in growing stage, but even the most-pessimistic projections indicate a boom. Today e- commerce has become an integral part of everyday life. Accessibility to e-commerce platforms is not a privilege but rather a necessity for most people, particularly in the urban areas. The first E-Commerce site in India was rediff.com. It was one of the most trafficked portals for both Indians and non-residents Indians. It provided a wealth of Indian related business news a reach engine, e-commerce and web solution services. Today the number of internet users in the world is close to 3 billion.1 Out of this, India has a total of 259.14 Million internet and broadband subscribers.2 This penetration of internet coupled with the increasing confidence of the internet users to purchase online, has led to an enormous growth in the e-commerce space, with an increasing number of customers registering on e-commerce websites and purchasing products through the use of mobile phones.3 It is not surprising, therefore, that India is in a prime position for the growth and development of the e- commerce sector. In particular, e-commerce presents one of the greatest opportunities in the retail sector. The mergers and acquisitions are also taking place in e-commerce domain. The flipkart - myntra deal of about 2000 crore has resulted in huge growth in merger and acquisition transactions. IRCTC which deals with online ticketing of the Indian railways has transformed railway ticketing in India to the extent that it is largest e-commerce portal in the SAARC region. Its convenience and ease of use has made this portal popular and changed the face of online booking with high confidence of its users.
  7. 7. E-commerce Industry: Current Scenario Continue..... India is on route to becoming the world’s fastest growing e-commerce market, if current projections are anything to go by. This growth story is being driven by robust investment activity in the sector and the rapid increase in internet users. Internet users in India have gone up from 50mn in 2007 to 300 million in 2014. Once upon a time, there was nothing like online shopping in India. With an internet user base of about 250.2 million as of June 2014 and a $400 billion industry to tap, India is the hottest destination for online retailers. Out of the current market size of $16bn, travel bookings with $9bn has the lion share of the market. Airlines accounts for 56 per cent, rail 34 per cent and hotel and others 10 per cent. The best example of successful Indian e- commerce is a government venture. The Indian Railways booking site IRCTC had $ 3bn GMV in 2014 with online bookings now accounting for 43% of all bookings. Its success indicates that the Indian consumer is willing to accept technology if it is a compelling value proposition. Presently the Indian Government has allowed 100% FDI in B2B e-commerce, while business-to-consumer (B2C) is prohibited. In addition to that there’s a compulsory 30% local sourcing norms for foreign players.
  8. 8. 71% 18% 6% 5% 2% Online Purchasing Online Travel E-Tail Financial Services Classifieds Other Source: World Bank, IAMAI, Aranca, Deutsche Bank Most online spend today is focused on travel. Estimates put online travel (rail, air, bus, hotel, and tours) at 71% of e- commerce spend, with B2B/B2C e-commerce at 5%. Within online travel, air travel is 50-60% of spend. Online purchasing for bus travel is small compared to air travel. Only 2% of online spend for travel is on bus tickets. Penetration rate in spend on bus travel is small relative to air travel. RedBus estimates that only 9% of spending on bus tickets is through online bookings, compared to 35% of air travel in India. E-commerce Industry: Current Scenario Continue.....
  9. 9. There are hundreds of other ecommerce websites in India but we have tried to assemble the game changers of the Industry. Lets have a look on the timeline of Giants emergence in the Industry. 2000: Indiatimes Shopping - Under prestigious Times Group, it operated as a marketplace model, like eBay, with sellers being allowed to sell directly on the website under their name and warranty. online shopping started here at a big level. A taste of online shopping was served here. Elegant and powerful till date. 2005: Ebay.in - This multi billion dollar company made its debut through Baazee.com and understood the potential of Indian online market. 2007: Infibeam.com - Launched in year 2007, it now collects a whooping revenue of 10 billion rupees. This online portal was first in its league. The best part is that its founder sold all his asset just to start this company with no external venture capital funding. 2007: Flipkart.com - Launched in year 2007, because of it, Amazon is now fighting its own employee built rival company. Flipkart.com is the dragon of online shopping in India. 2007: Myntra.com - It was launched in year 2007 now merged with Flipkart.com to fight Amazon.in, Myntra have a brilliant tap over the customers who love fashion & variety. 2007: Inkfruit.com - A 'hatke' site, launched in 2007 focused on trend and redefining style. It later merged with Zovi.com to compete harder with the fast growing competition in Indian Retail market. 2008: Homeshop18.com - Again a 2008 product Homeshop18 has grown from Television to laptop. This portal is a unique experience in itself. The deals are so lavishing that you cant take you eyes off them. It was launched 7 years ago at 24X7 T.V. channel selling products through Anchors. Later in 2011 it was launched as a website. 2010: Snapdeal.com - Five years ago with four square growth, started as a deal and coupon site, Snapdeal soon switched to became an ecommerce portal to harnessing the power of online retailing. And now it stands as a multimillion company regulating tides of online retailing. 2012: Jabong.com - It has been 3 years since its inception but the brilliant service and amazing understanding of customer needs have turned this online shopping portal into a nuclear of e-retailing in India. It majorly focus on Tier- II & Tier-III cities. 2013: Amazon.in - Came in 2003 and plunged a $2 billion investment to crush the competition and grow. This is in fact the spice of worlds largest online retailer fighting in India for its dominance. Indian E-commerce Timeline
  10. 10. Indian E-commerce Timeline Continue..... 2000 2002 2004 2006 2008 2010 2012 2014 Year Year
  11. 11. E-commerce Industry: Classification E-Commerce E-Tail (Flipkart, Jabong, Snapdeal, Myntra, etc.) Other (Mydala, Pay Point India, DTDC, etc.) Classifieds (Bharat Matrimony, People Group, Zomato, Quikr, etc.) Travel (MakeMyTrip, Yatra, Redbus, IRCTC, etc.)
  12. 12. E-Tail E-retailing in India is booming at a great pace with the current market value being $2.3 Billion which has grown from the $600 million two year ago. It is expected to reach$32 Billion by the year 2020. Almost 50% of people who consume e-retail are from small town while the rest 50% is from the 8 major metros. This clearly denotes that E- Commerce is skipping the evolution of one generation of retail in the country. The major players in the Indian e-Commerce industry are Flipkart, Snapdeal and Amazon. The three are competing not for profit but to own the major part of the revenue pie. Between the war of these clans, there have been major acquisitions, mergers and pivoting. Flipkart has acquired Myntra, while Tradus and Yebhi have pivoted their business models. Tradus is now a fresh food and grocery E-Tailer, while Yebhi is an aggregation website for fashion products listed on other sites. FirstCry, HopScotch and BabyOye are the leading players for baby care products in the industry. FirstCry is the leader in the baby care products online retail segment, and has been around for 4 years now. HopScotch is a relatively new entrant and has a flash sales model (which offers smaller scale) as opposed to FirstCry’s inventory- based model. BabyOye follows both an inventory storage model and a just-in-time arrangement with its distribution partners. It had acquired its competitor Hoopos in late 2013. In return, BabyOye has been acquired by the Mahindra group in February 2015. It appears that the niche baby care players have increasingly been edged out of the market by the large horizontal players such as Flipkart, SnapDeal and Amazon. As a result, out of the half a dozen baby care focused players that had sprung up about five years ago, only a couple of E-tailers, like FirstCry and Hopscotch, remain in the game. E-commerce Industry: Classification Continue.....
  13. 13. E-Tail Continue….. The lifestyle categories consist of apparel, shoes, jewellery, accessories and home décor and accounts for a massive 45% of the entire e-retail market. With the acquisition of Myntra, the prominent players are Jabong, Zovi and FashionAndYou. They continue to face enormous competition from the horizontal players such as Flipkart, SnapDeal and Amazon that are focusing on fashion more and more. Among the current verticals of Indian ecommerce, online travel segment still holds the biggest pie with 61% market share or Rs 49,730 crore. E-tailing which involves buying and selling or consumer products online increased their share to 29% or Rs 23642 crore. Overall, e-tailing grew 1.4 times compared to 2013. Here is a breakdown of the e-tailing segment in 2013:  Mobile and accessories: 41% or Rs 9936 crore  Apparels, Footwear and Personal items: 20% of Rs 4699 crore  Consumer durables and Kitchen durables: 14% or Rs 3404 crore  Laptops, Notebooks and Tablets: 11.75% or Rs 2780 crore  Home furnishing: 4.4% or Rs 1059 crore  Books: 2.7% or Rs 648 crore E-commerce Industry: Classification Continue.....
  14. 14. Travel As per the recent IAMAI report on the state of Indian ecommerce industry, it was revealed that with 61% share or Rs.50,050 crore of the digital transactions in 2014, travel industry is still the biggest segment. Three shifts are underway. One, with air tickets becoming a staple, travel portals are turning their focus to hotel bookings and travel packages. "Online penetration (of hotel bookings) is only around 7%," says a recent Nomura research report. Presently, there are around 80 online travel start-ups in India, generating a revenue of approximately US$ 9.7 billion and a growth of 31 per cent year on year. “The January-April 2015 quarter has seen the segment receive a funding of approximately US$ 40 million (source Venture Intelligence data). This is a significant increase when compared to US$14.8 million invested in the online space during January-April 2014. Further, till December 2014, the segment had received a total of US$ 115.69 million spread across 13 deals. If we go by this trend, it is quite possible that the travel industry will continue to receive investor support in the current fiscal as well,” opines Rajat Tandon, senior director, NASSCOM 10,000 startups Program. The biggest players in the travel category are Makemytrip.com, Yatra.com and the IRCTC website for railway bookings. The unfettered growth of online travel category has been possible because the regulatory and infrastructure issues do not impede its growth. Also, it does not face the infrastructure challenges since the goods need not be transferred physically. E-commerce Industry: Classification Continue.....
  15. 15. Classified Along with travel, e-Tailing and other sectors, classifieds market grew remarkably, with a value of INR 896 crores (US$1.4 million) by December 2014. Competing with the major players in the digital commerce sphere, online service market grew with a CAGR of 73% since 2010. It estimated a value of INR 2,025 crores (US$3.3 million) by December 2014. Among online ticketing services, online commuting, online food and grocery delivery system, the food retail sector saw a boom of 40% over the last year, and by December 2014 estimated a value of INR 350 crores (US$55.9 million). B2B and B2C Classifieds (jobs, matrimony, car, real estate etc.) contribute to 5%, whereas other online services such as online entertainment ticketing, online food delivery, buying discounts/deals/vouchers etc. form 2 % of the overall market. E-commerce Industry: Classification Continue.....
  16. 16. E-commerce Industry: Key players Flipkart is a leading e-commerce company and grab the first position after acquire myntra in a deal of $3.1 billion. Flipkart has started as a price comparison online portal with an initial investment of 8,000 USD and later turned into an e-retailing giant which recently ticked the 1 billion USD in gross merchandise volume. It started with a consignment model where goods were procured on demand and turned into inventory e-retailer supported by registered suppliers since it provided better control on the logistics chain. Flipkart began selling books to begin with. It soon expanded and began offering a wide variety of goods. Innovating right from the start, Flipkart has been home to few of the striking features of Indian e-commerce. Flipkart was the first to implement the popular ‘Cash On Delivery’ facility, which every online shopping website in India offers as an option today. Flipkart established warehouses in Delhi, Bangalore, Mumbai and Kolkata managing a fine balance between inventory and cost of delivering goods. Facing difficulties from the 3PLs in the form of higher delivery cost, late deliveries and faulty products delivered resulting in return and customer dissatisfaction, it has started its own logistics arm named e-Kart. E-Kart provides a robust back-end support to Flipkart and ensures timely deliveries. To achieve the economies of scale, recently e-Kart started providing back-end support to other e-retailers. It has consolidated the market and added strengths by acquiring We Read, Mime360, Chakpak.com, Letsbuy.com and Myntra along the way. The company employs around 13,000 employees and plans to add 10,000 to 12,000 more in next one to three years after a recent acquisition of Myntra. Flipkart is planning to enter into grocery segment soon after amazon started its grocery pilot project in Bangalore as Kirana now. Both amazon and Flipkart may face stiff competition from local startups like bigbasket, zopnow, bazaarcart etc. Flipkart
  17. 17. E-commerce Industry: Key players Continue..... 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. Amazon reported the revenue of $89 billion in 2014. Amazon India has two fulfillment centers in Mumbai and Bangalore and plans to start five new fulfillment centres across the country. 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. Amazon India
  18. 18. E-commerce Industry: Key players Continue..... BookMyShow BookMyShow is India’s biggest online movies and events ticketing company and occupies 85 to 90 percent of the online entertainment-ticketing market; 70 percent of its sales comes from movie tickets and the remaining from sports, plays and live events. At present, sports accounts for almost 20 percent of its revenues and is seen as a future growth area. BookMyShow reaches about 800 to 900 cinemas in 200 cities and towns. About 60 percent of its transactions take place via its mobile app which, say experts, is the most successful mobile ecommerce app in the country. Paytm Paytm is a unique web-cum-mobile platform. It has taken a big leap towards mobile commerce, trying to cash in on the wide mobile handset penetration, and is today India’s largest mobile commerce company. It started by offering mobile recharge and utility bill payments, and now offers a full marketplace to consumers on its mobile apps. It has over 20 million registered users and has in a short span of time scaled to more than 15 million orders per month. Paytm is already a leading firm in the electronic payment space. The long-term goal of Paytm is to be a financial services company for India’s unbanked population (41 percent of the total). The company intends to be the first gateway for paying bills and transferring money.
  19. 19. India first came into interaction with the online E-Commerce via the IRCTC. The government of India experimented this online strategy to make it convenient for its public to book the train tickets. Hence, the government came forward with the IRCTC Online Passenger Reservation System, which for the first time encountered the online ticket booking from anywhere at any time. This was a boon to the common man as now they don’t have to wait for long in line, no issues for wastage of time during unavailability of the trains, no burden on the ticket bookers and many more. The advancements in the technology as the years passed on have been also seen in the IRCTC Online system as now one can book tickets (tatkal, normal, etc.) on one go, easy payments, can check the status of the ticket and availability of the train as well. This is a big achievement in the history of India in the field of online E- Commerce. After the unpredicted success of the IRCTC, the online ticket booking system was followed by the airlines (like AirDeccan, Indian Airlines, Spicejet, etc.). Airline agency encouraged, web booking to save the commission given to agents and thus in a way made a major population of the country to try E-Commerce for the first time. Today, the booking system is not just limited to the transportation rather hotel bookings, bus booking etc. are being done using the websites like Makemytrip and Yatra. IRCTC E-commerce Industry: Key players Continue.....
  20. 20. E-commerce categories Business-to-Business (B2B) B2B activities include purchasing and procurement, supplier management, inventory management, channel management, sales activities, payment management, and service and support. Tradeindia.com, India’s largest B2B portal, maintained by Infocom Network Ltd. Observed that e-commerce transaction in India show a growth rate of 30% to 40% and will soon reach the $100 million mark. International brands are keen to make the most of the growing Indian market and are relying on the web to exploit the customer base. Tradeindia.com, Matexnet.com, Auctionindia.com, Indiamart.com, Metaljunction.com are some of the leading B2B exchanges. Over the years, the scope of B2B transactions has broadened. Moving on from sales, corporations are now using B2B communications to promote investment, trade stocks and forge financial alliances. Originally coined to describe electronic communication between business or enterprises. Business-to-Business or B2B is now commonly used to describe all products and service used by enterprises. Business-to-Business covers the entire gamut of E-Commerce that can occur between two organisations. Transaction between industrial, manufactures, partners and retailers, or between companies, primarily fall into this category. Wholesaler Customer Business Organisation Website Orders Order Processing Sells
  21. 21. E-commerce categories Continue...... Business-to-Consumer (B2C) Simply put, B2C Transactions are direct dealings between businesses and consumers. A relatively new category, B2C started gaining momentum in the late 1990s when the internet became more accessible. This category includes everything, from information searches and electronic shopping to interactive games delivered online. Some share of e-commerce revenues is generated from B2C transactions. With a huge number of travel portals, railways and airlines have played a significant role in e-commerce transactions in India. Recently, Makemytrip.com registered a turnover of Rs.1000 crore ($200 million). In 2007-08, travel alone constituted 50% of Rs.4800 crore ($960 million) online market. In the last few years online services like banking, bill payment, ticketing, hotel room booking, matrimonial sites and job sites are getting increasingly popular. With the stock exchange, too, coming online, there has been a tremendous boost in the online market. However, B2C still has a long way to go to be on par with B2B in India. This is mainly because B2B transactions are of much grater value than B2C. Customer Business Organisation Website Order Processing Orders
  22. 22. Consumer-to-Consumer (C2C) C2C commerce is the oldest form of trade and has existed long before the web. However, global connectivity has given it a different dimension. Such transactions are yet to make a significant impact on web-based commerce. Auction sites are one example of such business. When individuals have to sell goods, they list them on auction sites where other can bid. This transaction involves consumer-to-consumer interface. These may or may not involve a third-party like in the case of the auction-exchange eBay. One of the biggest challenges that C2C faces is lack of trust. The lack of a reference point make it difficult for buyers to feel confident about the people they are dealing with. Both buyer and seller are unsure of the quality of goods, credibility and payments. Website Customer 1 Places advertisement Want to sell Products Want to buy Products Receives products Receives money Customer 2 E-commerce categories Continue......
  23. 23. E-commerce categories Continue...... In this business model, it is consumers who offer products and services to companies. This is an emerging model in India, C2B is at an early stage. C2B connects a large audience to a bi-directional network through the internet The accessibility of the web and technologies like digital printing, high-performance computers and software are leading people to take this medium seriously. Website Business Organisation Customer Processes Order Places money for particular service Receives products Receives money Consumer-to-Business (C2B)
  24. 24. E-commerce Industry: Growth Since the E-Commerce industry is fast rising, changes can be seen over a year. The sector in India has grown by 34% (CAGR) since 2009 to touch 16.4 billion USD in 20141. The sector is expected to be in the range of 22 billion USD in 2015. In India’s USD11b Indian e-commerce market is expected to grow to ~USD20b by 2015 (37% CAGR) and Google expects it to grow to USD70b by 2020 (30% CAGR). Growth in e-commerce will be led by e-tailing (online shopping for physical goods), which is projected to grow from ~USD2b to USD7b+ in three years and USD45b by 2020. Within e- tailing, fashion is set to grow the fastest. According to the report by Goldman Sachs, the E-Commerce market will account for 2.5% of the India’s GDP by 2030, growing 15 times and reaching US$ 300 billion. The report cited the "hyper growth in affordable smartphones, improving infrastructure, and a propensity to transact online," as key growth factors. E-tailing will be the fastest growing segment: As at the end of 2013, e-tailing constituted only ~16% of the Indian e- commerce industry. However, as predicted by Google India, this will be the biggest component of Indian e-commerce in a few years. By 2020, e-tailing is projected to grow to USD45b, up from ~USD2b in 2013 and ~ USD4b in 2014. This would then be the largest segment in the estimated USD70b e-commerce industry by then. Within e-tailing, fashion & apparel will grow fastest: 2013 saw a steep rise in the fashion category, where e- commerce GMV doubled from USD278m t o U SD559m. Fashion is likely to be a key driver of growth, going forward. It contributed 28% to overall GMV of E-tailing, but is expected to contribute 35% to incremental market, and grow to USD2.8b by CY16 (33% share v/s 28% in CY13).
  25. 25. Currently, e-Travel comprises 70% of the total e-Commerce market. E-Tailing, which comprises of online retail and online marketplaces, has become the fastest-growing segment in the larger market having grown at a CAGR of around 56% over 2009-2014. The size of the e-Tail market is pegged at 6 billion USD in 2015. Books, apparel and accessories and electronics are the largest selling products through e-Tailing, constituting around 80% of product distribution. The increasing use of smartphones, tablets and internet broadband and 3G has led to developing a strong consumer base likely to increase further. This, combined with a larger number of homegrown e-Tail companies with their innovative business models has led to a robust e-Tail market in India rearing to expand at high speed. 0 5 10 15 20 25 30 2009 2010 2011 2012 2013 2014 2015 0.4 0.6 1 1.5 2.3 3.5 63.8 5.3 7 9.5 12.6 16.4 21.3 E-Tail E-Commerce(including E-Tail) Source: IAMAI, CRISIL, Gartner, PwC analysis and industry experts E-commerce Industry: Growth continue....
  26. 26. E-commerce Industry: Growth continue.... An analysis of the demographic profile of internet users further testifies that E-Commerce will rise rapidly in India in coming years. Around 75% of Indian internet users are in the age group of 15 to 34 years. This category shops more than the remaining population. Peer pressure, rising aspirations with career growth, fashion and trends encourage this segment to shop more than any other category and India, therefore, clearly enjoys a demographic dividend that favours the growth of E-Commerce. In coming years, as internet presence increases in rural areas, rural India will yield more E-Commerce business. 9% 16% 38% 37% 0% 5% 10% 15% 20% 25% 30% 35% 40% Other 35-44 year olds 25-34 year olds 15-24 year olds Demographic profile of India online users (as on September 2013) Demographic profile of India online users (as on September 2013) Source: Statista website
  27. 27. E-commerce Industry: Growth continue.... 0 50 100 150 200 250 300 350 400 2012 2013 2014 2015 E 99 130 165 21638 60 92 138 Urban Rural Geographical distribution of internet users in India (million) Source: IAMAI-IMRB A significantly low (19%) but fast-growing internet population of 257 million in 2014 is an indicator of the sector’s huge growth potential in India. However, in relation with its population, only 19% Indians use the internet. This indicates the potential of internet use in India and as internet penetration increases, the potential of growth for the E-Commerce industry will also increase. According to PWC report, The number of mobile subscribers in India jumped from 261 million in 2007-2008 to 910 million in 2013- 2014. Along with telephony, internet penetration is soaring in rural and urban India. Moreover, the number of rural internet users is growing by 58% annually. Increases in the number of smartphones and 3G subscriptions are further driving this growth. Indeed, the number of smartphone users is expected to grow at a CAGR 91% from 2012 through 2016, jumping from 29 million to 382 million. Similarly, the number of 3G subscribers could expand at a CAGR of 84%—from 23 million to 266 million—during the same period.
  28. 28. E-commerce Industry: Apparel Online fashion is emerging as the fastest growing category in India’s booming e-commerce market, backed by strong technology as well as marketing dexterity. It is growing at such a fast rate that experts believe by 2020, India is expected to generate $100 billion online retail revenue out of which $35 billion will come from fashion e-commerce. In other words, online apparel sales are set to grow four times in the next 5 years to contribute significantly to the burgeoning e-commerce growth. Apparels is the fastest growing segment in India. 2013 saw a steep rise in the fashion category, where e -commerce Gross Merchandise Volume (GMV) doubled from USD 278m to USD 559m. Fashion is likely to be a key driver of growth, going forward. It contributed 28% to overall GMV of E-tailing, but is expected to contribute 35% to incremental market, and grow to USD2.8b by CY16 (33% share v/s 28% in CY13). In April 2014, Amazon India started selling apparel on its India website, entering a fast growing and higher-margin category. This increased competition for Myntra and Jabong, the top firms in the category. Flipkart and rival, Snapdeal, had also been trying to build their apparel business. Flipkart eventually bought out Myntra in May 2014, a month after Amazon’s entering the apparel market.
  29. 29. There is a huge potential in the market, since increasing healthcare awareness which has made people to become more health conscious has pushed the growth of this market. Some of the major players in the market are Healthkart, Snapdeal, Amazon and Healthgenie which are trying to capture the market by maximizing their operation to different cities. The online healthcare product market forms nearly 0.1% contribution in the overall healthcare market in India, so there is a huge gap between the offline and online mode of sales which provides a huge opportunity to the new entrants to capture a significant market share. In the medium term, the market for online healthcare products is likely to grow, driven by tremendous growth in number of online healthcare product providers, surge in product categories as well as rise in internet penetration. This is anticipated to post market revenues at INR 17 billion by FY’2018. According to the research report, the online healthcare products market will grow at a considerable CAGR rate thus exceeding INR 33 billion by 2020 due to the increasing number of product categories, new entrants in the market and rise in tech savvy population. However, the ease of ordering medicines and good deals offered by online vendors -with 15% to 20% discounts thrown in -is attracting a small but growing number of customers. Medicines for chronic ailments, like diabetes and hypertension, are the bestsellers. Tandon of 1mg.com says their app has had over 1.5 million downloads since its launch in April and has served around 30-40,000 consumers in Delhi NCR till May. So far e-pharmacies in India have been running smoothly but in the absence of regulation, buying pills online can be risky . One way out could be accreditation of online pharmacies as is done in the West but till that happens, the corner chemist may be the safest bet. E-commerce Industry: pharmacy
  30. 30. E-commerce Industry: Recent trends  Smartphones are driving the E-Commerce industry: The most important contributing factor to the rapid growth of digital commerce in India is the increase in the use of smartphones. Mobiles and mobile accessories have taken up the maximum share of the digital commerce market in India. e-Tailing sector had a share of 41% of the total revenue, closely followed by Apparels, Footwear and personal items, in total, having 20% share. Consumer durable items along with kitchen appliances were estimated at around INR 3,404 crores (US$5.6 million), and the remaining 25% was dominated by Laptops/Tablets/Netbooks (INR 2,780 crores or US$4.6 million), Home Furnishing (INR 1,059 crores or US$1.7 million) and Books (INR 648 crores or US$0.1 million). Using Plastic money to shop online is the setting in. Almost 45% of online shoppers reportedly preferred a cash on delivery mode of payment over credit cards (16%) and Debit Cards (21%). Only 10% opted for Internet Banking and a scanty 8% preferred cash cards, mobile wallets, and other such modes of payment.  Classifieds and Online Service Market gain momentum : Along with travel, e-Tailing and other sectors, classifieds market grew remarkably, with a value of INR 896 crores (US$1.4 million) by December 2014. Competing with the major players in the digital commerce sphere, online service market grew with a CAGR of 73% since 2010. It estimated a value of INR 2,025 crores (US$3.3 million) by December 2014. Among online ticketing services, online commuting, online food and grocery delivery system, the food retail sector saw a boom of 40% over the last year, and by December 2014 estimated a value of INR 350 crores (US$55.9 million).  Online Grocery Store: Online grocery stores are gaining popularity in India due to absolute convenience, ease of shopping and a fast-growing market. Punexpress.com, Milestore.com, Atadaal.com have already entered the market and are gaining popularity. They provide discounted product and free home delivery. All of these stores are targeting the Indian housewife, who are yet to move to e-commerce way of shopping.
  31. 31. COD rules in India: The Indian market is yet not comfortable to adopt payments through credit or debit cards. COD accounts for up to 60 per cent of transactions, according to Internet and Mobile Association of India and audit firm KPMG. Overdependence on cash-on-delivery mode of payment remains worrisome as the transactions add about 3 per cent additional costs. Also, the additional processes required for COD orders, longer payment cycle, higher instances of returns and associated costs are hurting margins. Cash on Delivery still rules the mode of payment used by online shoppers, as it resulted in 45% of all payments in 2014. Debit Cards came at second position with 21% share, followed by 16% by Credit Cards; Internet Banking at 10%. Mobile wallets, which have seen a surge of activity in the last few months, resulted in 8% of all payments. Last year we had reported that 20% of all payments are being done on mobile devices. Hence, with 8% share of mobile wallets in the overall online payments, it means that the niche is also growing rapidly. Reportedly, there are 300 million Internet users in India right now, and by end of 2016, 500 million mark would be breached. 0% 10% 20% 30% 40% 50% Cash on Delivery Debit Cards Credit Cards Internet Banking Mobile Wallet 45% 21% 16% 10% 8% Indian E-Commerce - Mode of Payment Indian E-Commerce - Mode of Payment Source: IMRB/IAMAI Report E-commerce Industry: Recent trends Continue....
  32. 32. Big data: More and more companies will be using the big data services to create personalized offers, an in-depth analysis of the collected data will help them make future decisions. To gain, retain and attain more customers, online retailers would have to leverage technology to the fullest, and by developing strategies through analytics produced using big data will help in making customers feel special and increase brand loyalty. With the increasing adoption and use of smartphones, businesses are able to collect large amount of data on consumers, which can be further utilised to do target-based marketing and advertising. Mergers and Acquisitions: Merger and Acquisitions are the increasing trend in the Indian E-Commerce. The great examples are Flipkart-Myntra and Ibibio-RedBus. The companies are acquiring because to maximize it’s firm’s value. RedBus acquired by Ibibio at $100-120 million and Flipkart acquires Myntra for $300 million. E-commerce Industry: Recent trends Continue....
  33. 33. Payment Gateway have high failure rate: This is a major challenge and results in poor customer experience. The payment gateway vendors and banks suck at technology. Payment gateway error rates are high (>25% of transactions fail at the gateway). RBI has made it really hard for anyone to use virtual mediums of payments (credit/debit cards, cash transfers etc.). Payment gateway's and banks also charge way too much commission on each transaction which is bad for the smaller players - which eats into their margins significantly. Cash on delivery is the preferred payment mode: In India, most of the people prefer to pay cash on delivery due to the low credit card diffusion and low trust in online transactions. Not like electronic payments, manual cash collection is quite perilous, expensive and laborious. Logistics & Supply Chain: Customer want their goods delivered in perfect condition and within a specific time frame. Regular post is not a viable option and couriers have their limitations in terms of reach. All this add to the costs. Shipping high-value goods might need insurance, which is an additional cost. Cyber Crime: One of the biggest fears that consumer have in e-commerce is cyber crime. Cyber crime includes criminal act such as viruses, phishing and denial of service attacks that cause e-commerce websites to loss revenues. E-Commerce companies suffers heavy losses due to stolen assets, breakdown of websites and so on. Apart from the financial loss, the companies reputation is at stake. For the customer, it is a loss at the mere push of the button and it’s a risk that the people are not easily willing to take. E-commerce Industry: challenges and issues
  34. 34. Cyber crime is a serious concern around the world over. It is a law enforcement challenge for governments. Furthermore loopholes in the current legal and regulatory framework, lack of assurance in safeguarding the privacy of personal and business data. Lack of payment gateways have hampered the growth of e-commerce. The information technology act was passed to make e-commerce safe. It imposes heavy penalties on those who misuse the channel to defraud others. Indian Customers Return Much of Their Products They Buy Online: In India, E-Commerce has lots of first time buyers. It means, they are still not sure about what to expect from e-Commerce websites; thus, purchasers fall prey to hard sell. Finally, when the product is delivered, they started feeling regret and return the goods. Therefore, customers’ regret is the biggest problem majorly in India. Returns are expensive for e-business companies, as reverse logistics presents unique challenges and it becomes more difficult in cross-border e- Commerce. Features Phones Rule The Roost: The total number of mobile users in India is very high, but various people still use feature phones, not smart phones. Therefore, the consumer group is still unable to make e-commerce purchase on the move while the country is still away from the scales tipping in favor of smart-phones. With increasing number of smart-phone users, the demand of online shopping also goes up automatically. E-commerce Industry: challenges and issues Continue....
  35. 35. E-commerce Industry: Future outlook  The Ecommerce is having huge scope in the upcoming future as the number of Indian E commerce are also increasing day by day and the number of users are also increasing in India. This shows the changing pattern of the customers taste and preferences. It is also going to increase the employment in the country.  According to the latest research by Forrester, a leading global research and advisory firm, the e-commerce market in India is set to grow the fastest within the Asia-Pacific Region at a CAGR of over 57% during 2012-16.  A new report by the Boston Consulting Group says online retail in India could be a $84-billion industry by 2016 — more than 10 times its worth in 2010 — and will account for 4.5 per cent of total retail.  The e-commerce platforms maximize its reach to the potential customers and provide them with a convenient, satisfying & secure shopping experience.  The third party e wallets are now replacing the cash-on-delivery method such that people feel safe as well as both seller and buyer is mutually satisfied
  36. 36. The Indian online industry is estimated to be a $90 billion industry by 2019. Presently, biggest share in online revenues come from online ticketing. Online ticketing eliminates the need for standing in queues and also touch and feel of the product is not required. The apparel segment is expected to grow significantly over the next few years. E-commerce players will rejoice since profit margins in apparel segment are higher as compared to other categories. As a result, the share of e-commerce in the overall e-tailing revenues will grow even faster at a CAGR of 40-50% and reach about $15 billion USD by 2019. E-Commerce industry in India will drive the future growth from $13 billion to $90 billion in 2020 because of rising disposable incomes and increasing customer awareness, increasing number of Smartphone users and Internet users, the share of apparel category in the overall online revenues will grow exponentially. According consultancy firm PwC and industry body ASSOCHAM:  Indian e-commerce industry will spend $950-1,900 million by 2017-2020 on infrastructure, logistics and warehousing  The industry is expected to spend an additional $500- 1,000 million during the same period on logistics functions, leading to a cumulative spend of $950-1,900 million till 2017-2020, it added  'Evolution of e-Commerce in India', estimates that over the next three to four years, there will be an addition of 7.5-15 million square feet of space in the form of fulfillment centers.  This indicates - addition of 6-12% to the space available in form of organized warehousing in India and almost 25-50% of all the incremental addition of consumption driven warehousing space in the same period. E-commerce Industry: Future outlook Continue....
  37. 37. It’s a boom for small and medium enterprises (SMEs) after joining ecommerce trend as these have started providing thousands of job opportunities. Thereby, unemployment will no more be the biggest challenge before Indian government. Ecommerce industry can proudly cite that it is contributing its fair share to GDP. By 2020, the e-commerce sector is anticipated to cross $ 80 billion. The sales sector will also enjoy boom due to its cost-effective trait. Online business transactions will reap revenues up to 51 percent more. The SMEs are in commanding position to create 1.3 million jobs every year. It would be a boost to the career- seekers who can plan their bright future after joining this industry. Conclusion

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