1. Ecommerce Sector India
India Ecommerce Sector Research
December 2010
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2. Agenda
• India Analysis: Internet, Broadband, Mobile ,Retail,
credit card overview
• Definition, Value Chain ,Key Drivers ,Challenges of
eCommerce
• Key Business Models in Ecommerce segment
• Analysis of each eCommerce Segment
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3. India Internet Usage: Internet and PC
Penetration
Internet Penetration Sep 2009
Source: Internet World Stats Sep 2009
• Internet penetration in India is low though 6.9% equates to 7.1 million.
• Claimed Internet users have grown 24.2 p.a from 46 mn in 2008 to 71 mn in 2009.
• Active Internet Users have grown 27.5% from 42 mn in 2008 to 52 mn in 2009.
Findings • Out of 818 mn population, 87 mn are PC literate. 71 Mn claim to use internet but only 52 mn are
active Internet Users.
• Rural Internet Penetration is about 5.5 Mn 3

4. India Internet Usage: Constitution and Time
Spent
• Small town users constitute 36% of the total Urban Internet User population
• School and College Students, Young men constitute 72% of the total users
Summary • With 81 million Internet users in India (roughly 1/3 of US) and time spent per week at 15
hrs, (comparable to US), has Indian market has hit its tipping point?
• Cyber cafes (37%), Office (30%), Home (23%) are major access points.
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5. India Internet Usage: Mobile & Broadband
Penetration in India
•)
Mobile subscriber market : 471 mn •Definition of Broadband,TRAI: Min. 2
Capable of accessing Internet : 127mn mbps. Compared to 10 mbps in Singapore
Regd. Mobile Internet Users :12Mn.
Active Mobile Users: 8 Mn •Broadband penetration is very low : 11 mn
IMRB estimates: 25 mn active users by 2012 in 2010 (1% of total population,15% of the
and 50 mn active users by 2014 total Internet Penetration
Growth driven by launch of 3G network in
India, reduction in 3G and GPRS prices)
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6. India Internet Scenario: Time spent on internet,
eCommerce and eCommerce total volumes
I • Internet usage has gone up from 9.3 hrs/week in 2008 to 15.7 hrs/week in 2009
• Time Spent on eCommerce Activities is around 10% ( 1.5-2 hrs)
Findings • Volume of eCommerce Transactions was around USD 2.8 bn in 2009, estimated to be around
USD 4.1bn in 2010
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7. India: Retail Sector growth
• India is the 5th largest destination retail destination in retail globally ( AT
Kearney GRDI report 2008)
• India retailing industry is at 390 bn and growing at 7%
• Heavy growth is expected post GFC, with single brand retail
stores, increased number of malls, growth in Tier 2 and Tier 3 cities
Findings
• Many of the big retailers have forayed into the on-line mode without much
success.
• On-line retail forms a meager 0.47% of the total retail market. Gift
Items, Books, mobile phone accessories, small eletronic goods form the bulk
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of sales

8. India: Potential of Tier2 and Tier cities
• 300 mega malls and 100+ hyper city malls are being opened in Tier 2 and Tier 3 cities (Source:
Business World 04/2010,Business India 01/2010)
• Tier 2 and Tier 3 cities have promising potential due to growth in IT/ITES/BPO/retail job growth
Findings • Tier 2 and Tier 3 cities have high internet, credit card ,loan and insurance coverage with a megacity
like income distribution
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9. India: Credit Card /Debit Card Penetration rate
Source: Credit Bureau India, India retail banking research
2009
• 90 mn cards under circulation :40 mn credit and 52 mn debit. 30%
year-on-year growth. Estimated 55 mn cc cards by 2012
(2009 Indian credit bureau)
• Under penetrated: Less than 1 per cent of personal consumption
expenditure (PCE) happening on cards. (global average of 5 per cent
Findings PCE on cards)
• Spend pattern is similar to international spends:
travel, entertainment, retail shopping and jewellery being the top
categories.
• Alternative Payment mechanisms have an important role
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10. eCommerce Categories and Value Chain
Analysis
Software
E- Payment Logistics & Customer Service
Platform/Tech
products/Services integration Fulfillments and CRM
tools
Source: Emerald Insight,
Definition: Buying and selling of products & services on the Internet or on any other
application that relies on the Internet.
Combinations are:
• Paying online & Consuming Online ( e.g. B2B networks, Online gaming)
Findings • Consuming online & Paying offline ( e.g. Matrimonial,Classifieds,Ad Networks)
• Contracting & Paying online & Consuming offline (e.g. Travel, Books)
Value Chain: consists of E-Products and Services, Software platform and Tech tools, Payment
integration , Logistic & Fulfilment mechanisms, ERP &CRM providers
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11. India: eCommerce growth
1. eCommerce Industry is estimated at USD
4.1 bn (2010). Projected growth is 40% Y-Y
Indian e-commerce market at INRI 9200
core is heavily tilted towards travel sites.
About 12% of the rest is contributed by on-
line classifieds like matrimonial and job
Source: India retail research 2010 portals.
2. Drivers of eCommerce growth:
 Increasing Internet user base
Findings  Technology advancements
 Bigger web presence of Corporates
 Longer reach in the Tier II & Tier III cities
2. Challenges to eCommerce growth
 Low Internet and credit card penetration
 Lack of strong discounts for buying online
 Limited vernacular content
 Reliable payment mechanisms
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12. India eCommerce: Business Models
Merchant Model: Online wholesale/retail of consumer products. Sales transactions are
executed on pre-determined prices or auctions. E.g.:
Indiaplaza.com,futurebazaar.com, flipkart.com, egully.com
Direct Model: model harnesses the power of the Internet and reach out to potential
customers directly by compressing the distribution chain. Eg makemytrip.com, cleartrip.com
Brokerage Model:Brokers create markets by providing a common platform for buyers and
sellers to facilitate transactions, charging commissions for transactions. Eg
CCAvenue, BillDesk
Advertising (Portal) Model: Here the website acts as the broadcaster by providing
free (not always) content and services such as emails, chats and blogs that are intermingled
Findings with advertising displays or banner ads .g. rediff.com, indiatimes.com
Infomediary Model: These are subscription based and provide extensive data analysis. E.g.
Indiainfoline.com,
Affiliate Model: This model offers purchase opportunities to web surfer done through
affiliated partner websites by providing them monetary incentives in terms of percentage of
revenue. Eg Flipkart.com, rediffbooks.com
Community Model: social networks,free content providers. This model can have
multiple revenue streams in the form of sale of ancillary items or services; voluntary
contributions; service subscriptions and contextual advertising e.g. ibibo.com
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13. India eCommerce: Quick Snapshot
 Ecommerce: The Indian e-commerce market at USD 18.4 bn (INRI 9200 crore)
is heavily tilted towards travel sites.
 80% of this market is constituted by travel portals like
Makemytrip.com, Yatra.com etc.
Findings  About 10% of the rest is contributed by on-line classifieds like matrimonial and
job portals.
 Online retailing is estimated at USD 2.2 Bn (INRI 1100) cores market which is
set to see tectonic growth given the right environment is built. This market is
poised to grow at 30% per year for next 5 years
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14. Online Travel
• India’s travel industry was pegged at over USD 2.8
Bn (Rs. 140 bn) by end of March 2010, comprising
of Tour Operators, Railways, Hotels and other such
entities.
• The online travel industry size currently is about
25% amounting to USD 700 mn by year 2010.
• Top 5 players:
MakeMyTrip, Cleartrip, Yatra, Travelguru,IRCTC
• The current growth rate of India’s online travel
industry is 45%. The operating margins of most
online travel operators are about 8-12%.
Makemytrip had a successful IPO in July2010
• The current growth rate of India’s online travel
industry is 45%. The operating margins of most
Company Revenues online travel operators are about 8-12%
Make My US 83.56 mn
• Growth is driven by Indian professionals traveling
Trip within India and abroad,
Travel Guru US 4 mn
ClearTrip US 9.6 mn
Yatra US 15.6 mn
IRCTC US 34mn
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15. Online Matrimony
Online matrimony segment is driven by 2 main
factors:
1) Arranged Marriages is still a norm in India
2) Online matrimony provides a much larger database
of grooms/brides unlike local match makers.
Dominated by 4 key players:
63 million by 2010-11( Empower research 2010)
Shaadi.com – is the leader with maximum visitor
traffic in FY 2010.Revenues (USD 18 mn)
Jeevansathi.com – is second in terms of unique
visitor traffic in the same year however, it is the
leader in terms of page-views (133 million) as
Company Revenues compared to Shaadi (75 million). (USD 14 mn)
Shaadi.com 18 mn Bharatmatrimony.com – is number 3 in terms of
unique visitors but it is also experiencing a decline
JeevanSathi 14mn in traffic like Shaadi.com (USD 10 mn)
.com Indiamatrimony.com with over 1 million profiles
Bharatmatri 10 mn is a significant player. (USD 4 mn)
mony.com
Indiamatrim 4mn Simplymarry.com, LifepartnerIndia.com,
ony.com Indiabestmatch.com, vivahabandhan.com,
shubhlagan.in are some of the other upcoming sites.
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16. Online Jobs
USD 0.5 bn (1000 cr market) Dominated by a
few big players such as:
Naukri.com – leader with over 10 million
unique visitors during FY 2008.
Monster.com – 2nd website in terms of visitor
traffic with around 6.5 million unique visitors in
fiscal 2010.
Timesjobs.com – fastest growing recorded a
40% jump in visitor traffic during FY 2010.
Clickjobs.com- Fourth largest with 2 mn
unique visitors
Driven by: Strong growth in India’s Services
sector, IT/ITES/ boom. (Naukri is part of
infoedge, monster is not listed in India , Times
jobs is part of Times of India group. Individual
revenue numbers are not available directly)
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17. Online Real Estate
Indiaproperty.com– maximum number of
unique visitors in FY 2010 (65 mn ) unique
visitors,150 mn page views
99acres.com – is number two in terms of
visitor traffic but leads in terms of page-views.
58 mn unique visitors, 180 mn page views
Magicbricks.com – 45 mn unique visitors,120
mn page views
Makaan.com – 35 mn unique visitors,102 mn
page views
Driven by: Strong growth in India’s Services
sector, IT/ITES/ boom, real estate boom in
boom towns. (99acres is part of infoedge. )
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18. B2B biz Networks/Directories
Free and cost-effective online applications are
available for all typical business processes of
SMEs. Revenue Model: Bulk Purchase orders
and Product search listing. Registered with more
than 40,000 product listings and 10,000
vendors
Top 3 leading b2b networks are:
• IndiaMART.com: Biggest B2B Market place.
Comprehensive directory of all major B2B
players with the contact details.
• Tradeindia.com: Second largest B2B
Market place. Registered with more than
25,000 product listings and 8,000 vendors
• BizXchange.in: Third largest B2B Market
place. Registered with more than 20,000
product listings and 6,000 vendors
•
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19. Online Retail Portals
Driven by India’s increasing internet and credit card
penetration. Provide a wider reach and even cover
tier2 and tier 3 cities. Primarily cater to professional
working class and youth.
Top 5 players are:
IndiaPlaza: Revenues of US$ 12mn in 2010 ( to be
confirmed). Claims to have the largest collection of
books and gift items
Infibeam: Launched India’s first ereader. Major
source of revenue from books though they started out
a shopping siteMark
across all categories
Rediff Shopping: Overall rediff revenues in March
2010 USD 18.84 mn. Claim that 25% revenues come
from shopping (to be verified)
eGully India: Online retailer across all categories
(launched in 2008). Revenues of 4 crores.
Naaptol India: Online retailer across all categories
(launched in 2007). Expected Revenues of 3.5 crores
in 2010
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20. Online books
Sachin Bansal,CEO FlipKart India:
Market size of whole of book industry in India is
estimated at 6000 crores and is growing at a very quick pace.
Market size for online book shopping in India is expected to
be between Rs. 70 crore for 2010 and growing at a healthy
rate 50-60% Year on Year ( to be verified). It is driven by
growing middle class, better internet access and
higher comfort of Indians with online shopping
Top 5 players (Based on Alexa rankings) are:
FlipKart: Aims to be Amazon of India. Posted revenue of Rs
5 crore in 2008-09 and its site attracts 5 million visitors a
month. In 2009,Mark grew to 8 crores with 8.5-9 mn visitors.
they
Bookshopindia: Claim to be second largerst book store. In
2009, they claim to post revenues of 3 crores with 4.5 mn
visitors.
IndiaPlaza: Largest shopping portal of India. Claim to have
the biggest collection of books (8 lakh titles )
Indiatimes shopping: Largest information portal of India.
Claim to get over 30% of total revenues by books (to be
verified) 20

21. Online Gifts
Driven by India’s increasing internet and credit card
penetration. India’s corporate gifts market is over US$
1.2 billion with online gifting constituting 1% of
overall share (Source: Business India news, Jan 2010)
Top 5 players (Based on Alexa rankings) are:
India Gifts Portal:
Claim to have the largest market share (20%) of
Corporate gifting market. Expected Revenues of over
20 crores in 2010 (to be confirmed)
GiftsIndia.com:
Expected revenues of 6-7 crores in 2010. claim to be
the second largest player
IndiaPlaza:
Indiatimes shopping:
Rediff Shopping:
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22. Online Shoes
India’s online footmarket is estimated to be
800 cr+ (Business world April 2009). Online
shoe selling constitutes only 1% of the total
market. Driven by increasing internet and credit
card penetration
BigShoeBazaar: Claim to be Largest online
authorized shoe store in South Asia. Claim
Revenues of 8.5 crores in 2009 (to be
confirmed)
IndiFootwear: Claim Revenues of 4.5 crores
in 2009 and seem to have highest number of
unique visitors in their category (requires
confirmation)
Playgroundonline: Cater to sports and
outdoor apparel market. Likely to do 1.3 crores
this year
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23. Online Kids shopping
India’s online baby care is estimated to be
1000 cr+ (Business India Dec 2009). Online
segment constitutes less than 3% of the total
market. Driven by increasing internet and credit
card penetration
BabyIndia: Claim to be fastest growing online
babycare store in India. Expected revenues 4
crores 2010 (to be confirmed).
Shopmania: Claim to derive largest share of
revenues from baby care segment (40% ).
Revenues for 2010: 2.8-3 crores
KidStudtio: Expected revenues of 1.5 crores
in 2010
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24. Payment Gateways
Problem area: Low credit card penetration, also online
payment is unreliable making ecommerce difficult. online
fraud and account
breaches are the biggest barriers to eCommerce. Online
shoppers are apprehensive and unwilling to provide their
credit card and bank details (Business world survey June
2008)
Payment gateways provide a solution. Leading Payment
gateways:
CCAvenue: Biggest payment gateway provider in India.
Revenues: 280 crores (March 2009).Tie-ups with all
leading banks, 30,000 merchants. Part of Avenues group
with multiple online business interests( Events, Online
travel services
EBS-Payments:online payments system offers payment
options; credit cards, prepaid cards and online bank
transfer.
neonePay: Offer
Pay Seal (from ICICI Bank)
Axis Payment Gateway: 24

25. Customer Online Billing solutions
Problem area: Enable individuals/customers to pay
bills online.Top two players:
1) BillDesk: Direct relationship model. One time.
Authentication of credit card/debit card. Small Fee
for every transaction. Investors: SIDBI ventures
2) Bill Junction (Tech Process Solutions Ltd):Use
Electronic Clearing Services where the customer
specifies the amount to be debited in his account
for every bill generated. Flat Subscription fee for
users. Even allow Enterprise and Corporate Bill
payment. Investors : ICICI Ventures, GreyLock
Ventures
3) Timesofmoney.com: Allow bill payment through
credit card/debit card services. Service product:
“DirectPay”. Subscription based model for users.
4) Easy2Pay: electronic bill presentation and
payment (EBPP) service. It enables the user to
view, store and pay the bills. It is India’s first real-
time EBPP service provider that offers multiple bill
payment modes. It only charges a one-time fee and
no annual charges. It has some big Corporate firms as
its clientele.
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26. mCommerce
Research conducted jointly by AC Nielsen and PayMate:
1) India has currently around 5 mn M-Commerce users.
2) Bangalore shows highest value spent on M-commerce followed by Delhi, Mumbai, Pune and
Hyderabad. Intention of using M-commerce in future is significantly higher at 60 per cent in
Bangalore as compared to 35 per cent in Mumbai and 52 per cent in Pune.
3) Initial limit in 2008 by RBI :The per transaction (Rs 2,500) and daily (Rs 5,000) limits
effectively narrow the scope of mobile payments to small ticket purchase. RBI has increased
the limit to Rs.10,000 and Rs. 50,000 respectively (Dec. 2009)
4) Mobile bus and movie ticket sales volumes rising significantly after RBI revision (VCCircle
June 2010)
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27. mPayments
Problem area: PC and Internet on PC penetration in India is low but
mobile penetration is high. For mCommerce to succeed, mobile
payments platform should be successful.
Recent regulation by RBI :
Leading Mobile payment providers:
1) mChek: Signed up with all leading telcos, banks, ticket providers,
insurance companies. Enable bill payments, ticket purchases. One
time credit card authentications setup. Investors: DFJ
2) Paymate: Like mChek, allows users to link mobile phone with a
credit card, bank account. Tie ups with mobile phone operators,
banks but smaller coverage
3) Obopay India: Part of Obopay group,California. Partnered with
Nokia for mobile payment platform. Revenues less than $1mn.
4) ATOM Tech: Part of Financial Technologies India group. Providing
a mobile app which includes a credit card on mobile. Any payment
requires a password authentication.
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28. Challenges with order fulfillments:Logistics
Problem area: Order Fulfillment is an important
part of ecommerce Value chain. Most ecommerce
providers use a combination of their own logistics
teams and also tie-ups with leading local logistics.
Based on Interviews, the following leading names in
logistics names were revealed:
1. DTDC logistics (part of DHL ,all India presence)
2. Gati (Maharashtra, Karnataka)
3. BlueDart (part of DHL ,all India presence)
4. VRL Logistics (Karnataka)
5. Aramex logistics (Maharashtra, Karnataka)
6. Vichare courier( Maharashtra)
Most of these provide tracking services for customers
and people are willing to pay a premium for proper
delivery.
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29. Ecommerce Software/Solution Providers
Many front-end ecommerce portals use ecommerce
solution/platform providers for their services.
Advantage is that these eCommerce solution
providers have proven expertise and the front-end
companies do not have to re-invent the wheel in all
areas.
Company Expertise
Verchaska Travel platform. Clients:
cleartrip,eezego,eToursOnline
Binary Maruti Udyog Ltd,
semantics automartindia.com
ProSolutions India Plaza, rediff-shopping,
Software indiatimes
eStoreGroup Merchant integration
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30. Conclusion
• Ecommerce in India is at a nascent stage though the potential for growth is high.
• Revenues are less than 1mn USD for identified
• E-Ticketing, E-billing, payment gateways are areas of Interest
• Mobile commerce and mobile payments space should be closely watched
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