2. Introduction
India's e-trade business sector was worth about USD 2.5 billion in 2009, it
went up to USD 6.3 billion in 2011, USD 16 billion in 2013 and is relied upon
to touch walloping USD 56 billion by 2023.
Since 2011, value speculators have put in about $1.2 billion (over Rs 7,490
crore) into online item retail
Over a 100 new companies added just on ecommerce section in 2013 and
2014
India set to surpass South Korea, Russia and Brazil with the evaluated
30.3bn by 2016.
3. Ecommerce Eco-system
• Letter E can be prefixed to every business
• If there is logic about a constraint of brick & mortar
• It is not e-retailing of electronics, fashion and books
alone
• Website Commerce (eWebsites !!)
• Subscription Access to Content (marketing sherpa)
• Pay per view (content, music, video)
• Advertising revenue (Million Dollar Homepage)
• Affiliate Marketing / Subscriber opt-in database
4. Ecommerce Eco-system
• Financial Services
• Payment Gateways (Billdesk, Ccavenue, CitiBank)
• Bill payments, Fund Transfers (ICICI Bank)
• E-Wallets like Airtel Money, Paypal
• Services sector
• Tickets (Buses/Movies/Hotels/Flights/Trains)
• Rental services (Taxi/housing)
• Tourism
• Matrimonials etc.
• Coupons/Rewards/Deal sites/SaaS.. And many more
6. Threat of New Entrants – High
• Threat of Entry is high for the e-commerce industry
• It is a very attractive industry
• The barriers to entry are not very strong
• Low initial capital investment is required
• The distribution channels are easily accessible
• The products offered are not very differentiated
• Consumer switching costs are low
7. Threat of New Entrants – High
• However, while it is relatively easy for newer players to enter
the market because of low barriers to entry, it is difficult for them
to gain recognition and attain high ranking on search engines
8. Threat of Substitutes – Medium
• Customers always have an option of making purchases
from physical stores personally or telephonically instead of
shopping online
•Because of low switching costs, the industry is more price
sensitive
• Trends like ‘showrooming’ leverage on the lower prices
provided by online retail
9. Threat of Substitutes – Medium
• There is also a threat of substitutes as Internet provides new
ways for doing business (eg. portals like OLX, etc.)
• Television marketing is another substitute for online shopping
10. Bargaining Power of Buyers – High
• The bargaining power of buyers is high
• There is abundance of consumer information facilitating
comparison and product knowledge
• The switching costs are also very low
• Buyers can switch from one channel to another without any
significant costs, thus, they are in a stronger position to bargain
11. Bargaining Power of Buyers – High
• A lot of power is with the consumer,
owing to the readily-available information
and low switching costs
12. Bargaining Power of Suppliers –
Moderate / High
• There are multiple sellers who can be listed on a website. This leaves
limited individual bargaining power for sellers
• However, sellers also have the option to list their products on other
websites, thus, giving them some power
• Shipping carriers and search engines can also be seen as suppliers,
and they do hold considerable bargaining power
13. Bargaining Power of Suppliers –
Moderate / High
• Depending on the product category, the bargaining
power of suppliers can range from moderate to high
• When there are less number of suppliers (eg. Motorola
for Flipkart), then the supplier has greater power
• Sometimes the number of suppliers is high (eg. Books),
in which case they have lower bargaining power
• There is sometimes also a possibility for the suppliers to
forward-integrate
14. Competitor Rivalry – High
• Intensity of rivalry among competitors is strong
• Undifferentiated products are sold by different players
• There are low switching costs and weak brand loyalty
• The industry is growing, thus, there is strong rivalry among
players to differentiate their offerings and to get more
customer attention
• Competition exists not only among online players with
online players, but also with offline players
• Players usually engage in price-based competition
15. Competitor Rivalry – High
• Aggressive promotional strategies and campaigns have
been carried out (eg. Flipkart Big Billion Sale, etc.)
17. E Commerce global industry size
•Twenty years after the first recorded online transaction —
Sting’s CD, Ten Summoner’s Tales — ecommerce is now a
worldwide market comprised of merchants ranging from multi-
national retailers to single owner-operator small businesses.
•According to Bigcommerce, e commerce as a segment of total
retail market is growing at 30% per year and is expected to reach
$2 trillion of sales in 2015.
21. E-Commerce Industry: Trends in India
•E-commerce is growing at a fast pace in India, having an estimated
size of about Rs 43,930 crore in FY13 and is expected to multiply with
a CAGR of 43.8%( FY08-13).
• Travel segment accounts for more than 70% of the total e commerce
transactions while retail segment encapsulates 12.5%.
•The e-commerce industry in India lags far behind various developed
and developing countries (share of ecommerce to total retail is
approximately 1.5% vis-à-vis 5.8% in US) mainly on account of low
internet penetration due to poor infrastructure.
27. Amazon.com, Inc.
• Amazon.com, Inc is an e-commerce company founded by Mr. Jeff Bezos in 1994.
• The company, headquartered in Seattle, Washington, USA, was incorporated as
Cadabra, but later changed the name to Amazon.
• Amazon.com started as an online bookstore, but soon diversified into several
product lines, selling video games, electronics, apparel, furniture, food, toys,
jewellery, etc.
• The company also manufactures electronics such as Amazon Kindle, an
ebookreader; and Kindle Fire, a tablet computer
The company owns over 40 subsidiaries. Some of the notable subsidiaries are
Zappos, Diapers.com, Kiva Systems, Goodreads, Teachstreet, and IMDb.
28. Amazon.com, Inc.
India presence
• Amazon made a formal entry into the Indian market, launching its website
Amazon.in in June 2013.
• Previously the company used Junglee.com to access the Indian market.
• Since its launch in June, the company has grown significantly by diversifying into
several product lines.
• Amazon started with around 7 million book titles and 13,000 movie titles.
• The company has now expanded into several verticals, including toys, baby
products, personal care, healthcare devices, computer and accessories, electronics,
home and kitchen appliances, fashion and lifestyle, etc.
29. Flipkart India Pvt Ltd
• Flipkart Online Services Pvt Ltd operates as a website -flipkart.com.
•The company began operations as an online bookstore in 2007, where it began
offering delivery of books at discounted prices to buyers in all major cities.
• Subsequently, Flipkart expanded its product offerings to become one of India's
largest online retail stores.
• The company is headquartered in Bengaluru, Karnataka
• The company was initially funded by the founders, with a seed capital of around
Rs. 400,000.
• The major investors include Accel Partners, Tiger Global, Iconiq Capital, Naspers.
30. Flipkart India Pvt Ltd
• Flipkart operates in the online marketplace segment and has several sellers on its
platform.
• The company offers fashion and lifestyle products, mobile phones, electronic
items, watches, cameras, books, home and kitchen appliances, gaming, music,
movies and posters, baby items, and sports and fitness-related products.
• Due to investigation regarding foreign direct investment violations, the company
has sold its front-end retail operations, WS Retail, to a group of investors.
• The company has now moved to an online marketplace model.
32. First cry.com
• Started in the year 2010 as a subsidary of Brainbees solutions
• Has around 7,00,000 registered customers, with over 70000
baby products.
• Has 70 stores across 36 cities which includes even towns such
as Hosur, Kota, Malegaon, Baramulla, Karnal and Raichur and
cities such as Surat, Jodhpur, Allahabad, Patiala and
Coimbatore.
• Gross merchandise sales of Rs 250 Cr which makes
firstcry.com one of the market leaders in the industry
• They raised about 90 Cr of funding from SAIF partners and IDG
Ventures
33. BabyOye.com
•Baby Oye.com started its operations on the year 2010.
• Reported Gross Merchandising value of INR Rs 60 Crore its
operations
• Recently bought Hoopos.com, another e-commerce venture
• 50% of the sales is from Tier 1 cities and rest of their sales is
from tier 2 and tier 3 cities
• Average order value being Rs 1000 – Rs 1500
• In terms of the gross margin, Apparel as a category seems to be
the highest covering 35%, with toys as second highest covering
25% and with child care being the third highest category with 20%
of margin
• Has AlexaPage rank of 17,924 and google page rank of 3/10.
•Bollywood Celebrity Karishma Kapoor is one of the board
members of baby oye.com
35. ClearTrip Pvt. Ltd.
• ClearTrip Travel Services Pvt Ltd was incorporated as a private
limited company on May 12, 2005.
• On March 31, 2006, the company became a wholly-owned
subsidiary of ClearTrip Inc, US.
ClearTrip is one of the leading online ticketing service companies.
• The website sells tickets for domestic rail travel, and domestic
and international air travel.
• Also, the company facilitates booking of domestic and
international hotel rooms and travel insurance.
.
36. ClearTrip Pvt. Ltd.
• The product enables travel agents and tour companies to book
tickets through the interface and receive instant commissions,
Cleartrip Mobile, and Cleartrip for Business - an online fully
integrated corporate travel management
• Over 85 per cent of the company's total revenues is from
India, with the revenue ratio of air and non-air products being
80:20.
38. Bigtree Entertainment Pvt Ltd
• Bigtree Entertainment Pvt Ltd, founded in 1999, is a ticketing,
information and analysis solutions provider.
• Bigtree started as a ticketing company, with the investment made
by Chase Capital Partners JP Morgan.
• BookMyShow.comis the flagship website of the company.
• The company launched the website in August 2007, and has
become India's leading online movie ticketing website.
• In addition, BookMyShow is also the authorised distributor for
ticket management software developed by New Zealand-based
Vista Entertainment.
• In terms of ticket sales, movies contribute around 75 per cent of
total ticket sales
39. Bigtree Entertainment Pvt Ltd
• Headquartered in Mumbai, BookMyShow.com has offices in New
Zealand, Malaysia, Australia and the UK.
• The company saw two major investments over the last five years, with
Network18 investing $3.2 million in March 2007, while Accel Partners
invested $18 million in August 2012.
The company's revenues increased to Rs. 526.2 million in 2012-13
from Rs. 294.7 million in 2011-12.
• The sharp increase of 78.5 per cent was due to movies as well as non
movies categories.
• In the non-movies categories, sports and live events were the most
popular segments..
40. Groupon Inc.
• Grouponwas formerly known as ThePoint.com.
• The company changed its name to Groupon, Inc in October 2008.
• The company, headquartered in Chicago, USA, offers deals in
various categories, including food and drink, events and activities,
beauty and spa, fitness, health, home and auto, shopping, and
education.
• The company promotes its services, whereby it sends mails to
subscribers informing them of discounted offers on goods,
services, and travel.
• These mails are selected on a complex algorithm, and takes into
account the subscriber's interest, location, etc
41. Groupon Inc.
Business model
•
The company offers one "Groupon" (also known as Group Coupon)
every day.
• If a certain number of people sign up for the offer, the deal is made
available to all.
• In case the predetermined number is not met, no one gets the deal
that day.
Competitors
• There are over 500 small- and medium-sized players in the online
deals segment.
42. eDabba.com
• Hybrid e-tailing model that aims to bring ecommerce to the
untapped markets of B and C class cities.
• It has tied up with over 700 offline touch points where customers
can browse the products and order.
• They can either pay in those points or make online payments
• The products will be either couriered to the customer’s address or
to the touch point.
• They have also started mobile franchisees that has brought in
small entrepreneurs, students and housewives into the fold to take
the consumers through the website.
44. Info Edge (India) Ltd
• Info Edge (India) Ltd, incorporated on May 1, 1995 as Info
Edge (India) Pvt Ltd, became a public limited company on April
27, 2006.
• The company's first website, Naukri.com, which was
launched in March 1997, broke even in 1998-99.
• The company's job portals are:
• Naukri.com-an online portal for searching jobs
• Naukrigulf.com-an online portal focused on jobs in the
Middle East
• Quadranglesearch.com-an offline executive search platform
• brijj.com-a professional networking website
• Firstnaukri.com-an online portal for fresher hiring
• Database monetisation accounts for a lion's share of the
portal's revenues while paid listings and job seeker services
are increasingly gaining share.
45. Info Edge (India) Ltd
• In September 2004, the company acquired Jeevansaathi.com, an
online matrimonial portal, and has launched a number of other portals
over the last 5-7 years
• Jeevansaathi.com's business model is primarily based on access to
the customers' contact details, for which the users pay.
• The portal also earns revenues based on the offline model, where the
website has opened traditional outlets for searching prospective
brides/ grooms.
• Real estate
• 99acres.com -an online portal for property searches
• Allcheckdeals.com-a real estate brokerage business
48. Market Statistics
• One of the fastest growing sectors of Digital Industry
43,000 Crore Industry. Online Travel dominating the industry with 70% market
share. 12.5% market share belongs to e-tailers with Amazon, Flipkart, Snapdeal
being the predominant players.
• Considering overall organized Retail industry, E-commerce accounts for 2.3%
• Distribution has always been a concern, as India follows Market place model,
there is a lack of proper distribution network, Recent Flipkart Big Billion day
debacle shows us the poor distribution network and infrastructure.
• Average time spent by the Indian consumer has increased by 20%
• COD(Cash on Delivery) was vital as this targeted customers who were not card
holders
53. • Online purchase intention rates have doubled in
three years for 12 of 22 measured categories
• Online browsing is highest in Latin America;
online buying is highest in Asia-Pacific
• Consumable products have a one-to-one
browse-to-buy ratio
• Mobile phones are catching up in developing
countries as the favoured online shopping
device
Source – Nielsen Report on E-commerce 2014
56. Growth story of e-commerce in India
The beginning
• Started in 2004 when eBay started its operations in India by acquiring
Baazee.com
• Followed by Flipkart in 2007
• In the same year, an online portal was started to customize goodies called
Myntra.
• Game changer that provided the much needed growth steroid was Cash on
Delivery option
• In 2010, Snapdeal, based on the marketplace model started providing daily
deals but pivoted into an e-commerce company
58. Growth story of e commerce in India- Present
and Future
•E-commerce in India encapsulates a $11 billion market and is
expected to grow to $20 billion by 2015 (CAGR OF 37% by 2013-
2015)
•The growth is being accelerated by the 30 percent increase in
traffic on ecommerce platforms coming from mobile phones and
tablets
•Mergers and acquisitions have shown considerable growth , the
Rs2,000-crore Flipkart- Myntra deal being a milestone.
•India and China happen to be the most rapidly expanding e
commerce markets in Asia-Pacific region, which is estimated to
account for nearly 35% of the total B2C online sales in 2014.
(eMarketer)
•http://forbesindia.com/article/checkin/
59. • E-commerce Industry has grown at a rapid pace of
45% over the past five years
• It has jumped from 62.5 billion Rupees in 2008 to 400
billion rupees in 2013
• With 65% share, online ticketing is the biggest
segment.
60.
61. • Tier 2 and Tier 3 cities contributing hugely to the
consumption online
• Features like Cash on Delivery has driven many
consumers skeptical of online payment towards the E-
commerce platforms.
• Strategies like aggressive pricing and frequent sales
used to attract Indian middle class.
64. • Expected to grow at 35% CAGR in the next 3-4 years
(Assocham Report)
• Increasing Internet penetration will play a huge role in
expanding the reach
• Ease of online payment is a big positive influence
• New entrants in Indian market will heat up the
competition
• Certain Government rules might need to be addressed
from the industry as a whole
• Logistics will play a key role in which industry player gains
lead over others
69. • North American market taken over by the Asia-Pacific
in terms of spends
• China will outspend US by 2016 in e-commerce with
sites like Alibaba dominating
• Countries like Russia,Mexico,Brazil,Italy, Canada
and Indonesia to drive e-commerce growth
Some Predictions
73. Internet Penetration and Usage
• With increasing user base there has been exponential increase in internet usage
• With advent of tablets, smartphones, 3G the internet dissemination has gained
impetus
• trend is expected to proliferate with the declining prices and increasing market of
smart devices equipped with most features of a laptop
• Internet users in India have gone up from 50 mn in 2007 to 300 million in 2014
76. Addressing Logistics
• Brand image of e-commerce firms may get tarnished due to
scarcity of quality logistics
• The major problems faced in e-commerce logistics are late
delivery, damaged/lost parcels, bad attitude of delivery
people, slow cash-on-delivery, lengthy return procedures
and no special services such as installation or “product try-
on”
• For tackling such problems firms can either build their own
logistics system or acquire or partner with existing logistics
companies
78. Dynamic Product Portfolio
• the product line has to be diverse and regularly updated for
retaining customer base
• Broad product categories in e-commerce are electronic
gadgets, apparels, home/kitchen appliances, lifestyle
accessories like watches, books, jewellery, beauty products
and cosmetics
• Customer not only looks for features but also seeks vibrancy
and novelty in the product
• Portfolio Dynamism is going to be the differentiator
between mediocre and meteoric growth
80. Plastic Money
• Enhancements in payment gateways have drastically improved the security and
usage of plastic money
• Multiple levels of authentication like one-time passwords (OTPs) and transaction
passwords strengthening customer confidence in online transactions
• Credits cards are the most popular payment instruments in the major e-
Commerce markets worldwide
84. Multiple Payment Options
• Availability of new payment options boosted the e-
commerce industry in India
• Options like Cash-on-Delivery has changed the rules of the
games on how the industry works
• The payment landscape has evolved considerably. In
addition to credit and debit cards, cash cards have also
emerged in the market
86. Growth of mobile commerce
• Online retailers’ growing reach in non-metro cities is being
driven by the rise in usage of mobile internet in the country
• the number of mobile internet users in the country stood at
173 million in December 2014
• Confederation of Indian Industry report estimates that in
the next six years, the number of people accessing the
internet through mobile is set to reach 600 million
• Major revenues of ecommerce websites are now expected
to come through mobile phones and apps
88. Localisation of Internet content
• Web content search in Hindi has grown a whopping 155 per
cent in the past year
• Hindi content searched through mobile Internet grew at
even higher rate of 300 per cent in the same period
• Snapdeal launched its interfaces in local languages: Hindi
and Tamil
• Online travel firm MakeMyTrip launched its Hindi app in
November 2014 and plans to add four more languages —
Gujarati, Tamil, Telugu and Malayalam
91. Online retail market to reach around Rs 180
billion by 2015-16
CRISIL Research estimates the size of the online retail
segment at Rs68 billion in 2012-13.
The segment has seen strong growth in the past 5 years
driven primarily by the apparel and electronics segments.
In the longer run, the growth is expected to be strong.
92. Entry of new players in niche segments such as grocery,
jewellery, furniture, etc. will drive growth along with large
investments being made by existing players in the apparel and
electronics segments
The online retail/E-Tailing industry clocked revenues of US
$1,292Mn in 2012, growing at 68%,a rate faster than any other
E-Commerce segments
Growth in 2013-14 is, however, expected to be slower than in
2012-13 because Flipkart, which was the largest player in this
segment, switched to the marketplace business model.
94. e-commerce has got the nerve of the online buyers and has drawn
some serious interest into itself. With their effective services and
trustworthiness, the online shopping media continues to ring alarms,
creating better and bigger grounds for settlement in the Indian
economy.
Many great features of online shopping like cash on delivery, express
delivery and 30 days return policy, give them an edge of advantage.
These online resources can offer a wide range of things from
apparels to electronics and skin care to sports utilities, so it is possible
to find everything you need while browsing them.
96. Electronics captures the first spot in online
retail followed by lifestyle
The Online retailing initially started with books.
However, it has been replaced by electronics which includes
mobile phones, cameras, tablets, televisions, home and kitchen
appliances, computers and memory drives among others.
Electronics currently leads the pie with 40 per cent share
followed by lifestyle (comprising mainly apparel and
footwear) with 35 per cent share.
97. Among the other categories, food and grocery, FMCG products, baby
products, gifts and flowers account for the largest share.
Most online players in this category operate in select cities such as
Mumbai, Bangalore, NCR and Pune.
Niche categories such as baby products and FMCG (only wellness
products) are also gaining popularity, following the success of
international counterparts such as diapers.com and soaps.com.
98. Traditional brick-and-mortar retailers
also gradually moving online
Our market size estimate for online retail only includes the
revenues of online retailers and does not include the online
revenues of traditional retailers.
With a sharp growth in volumes as well as the number of retailers
in the online retail segment, many traditional retailers have
increased focus on their online sales channel.
While the online sales for traditional retailers is estimated to be
small in comparison with online retail companies at present, this
scenario could change quickly.
99. Traditional retailers have realized that online retailers could
pose challenge to their business and having an online
presence is critical to be able to effectively compete with them.
However, a shift in focus to the online model is not expected
to be easy for a traditional retailer, as substantial investments
will be required in technology and logistics.
They have to make a choice between investing in their core
business, which is brick-and-mortar stores, or the online retail
segment.
100. Profitability highest in lifestyle products; greater
scale results in better margins
Research has determined that profitability (at the gross margin
level) is the highest in the lifestyle segment, and the least in the
electronics (mobile phones) segment.
Online retail stores that sell products through private labels enjoy
higher profitability.
101. Sub-segment wise gross margins
The above discussed profitability metrics are
applicable to companies which have garnered a
considerable market share and have a wide-ranging
product catalog.
102. Sub-segment wise gross margins
Further, we believe that attaining scale is essential to attain
profitability in this segment:
• High scale (around 30,000 transactions per day) typically
gives EBITDA margins of 5-9 per cent
• Low scale (around 2,000 transactions per day) typically
gives EBITDA margins of 0-4 per cent
104. Consumer behavior : Browsing or Buying? –
A product segment overview
Are consumers using the Internet to research products with the
intention of making a purchase online, or are they taking their
new-found knowledge back to brick-and-mortar retail locations to
make the transaction?
The answer largely depends on the product
105. Consumer behavior : Browsing or Buying? –
A product segment overview
People are more likely to buy non-consumables online. But some
have lower browse/buy ratios.
Products more conducive to online browsing than buying include:
electronic equipment, mobile phones, computer hardware/software,
sporting goods and cars/ motorcycles.
These products can carry a high price tag and often require a
physical try-before-you-buy test run
109. Expected future segmental changes –
categories with room to grow
Purchase intention rates in 2014 have doubled since 2011 for
event tickets (41%), electronic books (34%), sporting goods (31%),
toys/dolls (29%), videos/DVDs/games (28%), music (27%), pet
supplies (21%)*, flowers (18%), cars/accessories (17%) and
alcoholic drinks (17%).
Rates have tripled in these three years for computer software
(27%) and nearly tripled for baby supplies (20%).
110. Expected future segmental changes –
categories with room to grow
Millennials (age 21-34) are a coveted demographic for
marketers in just about any industry, and e-commerce is no
exception. This age segment has grown up in the digital era, so
this comes as no surprise.
With a plethora of Internet-connected devices to choose from,
there is no shortage of ways for consumers to browse and buy
online
