analysis of e-commerce industry in india

Analysis of

E-Commerce Industry in IndiaBy

Wadhonkar Pavankumar D.

Department of Management Studies, IIT Roorkee

IIT ROORKEE

Overview of the industryDomain wise

Market PenetrationMarket Trends Market Potential

Competitive Analysis

Value 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 be in the range of 22 billion USD in 2015

$ 22 Bn2015P

$ 3.8 Bn2009

34% CAGR

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 total

e-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.

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

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

Series 1 Column1 Column2





• 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.





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%.





• Different e-commerce companies follow different models for functioning.

• Amazon India follows Online Marketplace model.

• Amazon India has two fulfilment centers in Mumbai and Bangalore.

• And it plans to start five new fulfilment centres across the country.

Sources: ASSOCHAM India, PwC





M-Commerce

There is a traffic torevenue gap on

mobile e-commercein India

Sources: Accel estimates, Accel portfolio

companies, CNNIC and other industry sources





Women Shoppers – A Growing Force

• Working women segment grew 43% in 2013 andconstitutes nearly 10% of Active internet users inIndia according to i-Cube & IAMAI

• Categories like baby care, home décor, jewelleryetc have traditionally been influenced by womendecision makers. As more choice becomeavailable more women are shopping online.

Sources: Accel estimates, Accel portfolio companies & comScore





• 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 36million 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.





E-commerce Friendly States

Top 3 e-commerce states• Delhi-NCR• Karnataka• Maharashtra

Large states with verylittle ecommerce presence:• Bihar• Uttrakhand• Chhattisgarh

Top 10 cities:1. Delhi2. Bangalore3. Mumbai4. Pune5. Hyderabad6. Chennai7. Kolkata8. Ahmedabad9. Jaipur10. Panaji

Central & North-Eastern India appears to have low adoption of e-commerce

Sources: Accel estimates, Accel portfolio companies, Google





Sources: Accel estimates, NSSO, Facebook

Young India Will Become Dominant Presence In E-Commerce

Young 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





Major difference between various companies is the way they maintain their inventory, Whilst Flipkart follows the inventory led model, Amazon India and Snapdeal, 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 (marketplace

model)

• 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





Company Name Alexa Popularity Rank in India

Flipkart.com 6

Amazon.in 8

Snapdeal.com 13

Quikr.com 17

Amazon.com 18

Jabong.com 21

Ebay.in 28

Paytm.com 30

Olx.in 37

Naukri.com 43

Alibaba.com 46

Shopclues.com 50

Myntra.com 52

Popularity Comparison of Various E-Commerce Websites in India

Source : Alexa.com accessed on 28 Mar 2015

Top 10 Parameters The E-Commerce Companies In India Should Be Evaluated Upon

Customer ExperienceTax And Regulatory

Environment

TechnologicalAdvancements

Operational Framework

Convergence Of Online And Off Line Channels

Customer Acquisition

Delivery Experience Digital Infrastructure

Payments And Transactions

Addressable Markets





E-products/ServicesSoftware

Platform/Tech toolsPayment

integrationLogistics &

FulfillmentsCustomer Service

and CRM

Source: Emerald Insight

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.

analysis of e-commerce industry in india

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amazon india

rural india

assocham india

facebookyoung india

pwc forbes india

accel estimates

different ecommerce

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