?Executive Summary? Dskjdkjddskdjnskjdnskjd sdkjsnkd kldnls m lsd dskd sd sd sd sl lc sclkls s dlslsddsldnlsnds dlsdsln ckd csd lds sld dl l dldckdn sldnlds slcldsn lsnlcns adilna alscjlana lakbei alhlhclakn alhlabc lcalcn ; a;nbjbcbab anklnnakblbacj akblabc albbue ablbaclbn ckblbibc albcja lankcka ‘hiandkmakivprNauosnhaiih sualnd h ahbdk bdkbs lshdlbsdmslahdlkaskdl andimansi ldnslb albdsa choot sbsjd, dla, sae;nd sexlssd dlaaalalsnd s slae dlh shun ldblba ;NDKJBJbbc jsjb kabjo ksd msama jdjs u d ;oheavy beole fart hya sh huins hysgt hyuts huts khijoyd anlnainn skahdkndlabdka lahdkaklakdbl lah lb laf nlaflanfknfa laf lanfklnf alfnlna lanf lund dhe ,ma choor ak kndlsna sex dlnflnwf fl dsjldn aldlkahdioqew alfnalnf alfalfa fladoifh;zvnlkz poflnf lweflanvldip dvwv s oii nnw ijijih I hgu oj yufug g hgyggiu bhbjk h j hg bj bhj yuf tftj hvj jbkj hulyg ty rd s rt cf gv hvj hbj jbkjbk jh uhl yugk tf rd fxgch vhj hjb jh hl Dskjdkjddskdjnskjdnskjd sdkjsnkd kldnls m lsd dskd sd sd sd sl lc sclkls s dlslsddsldnlsnds dlsdsln ckd csd lds sld dl l dldckdn sldnlds slcldsn lsnlcns adilna alscjlana lakbei alhlhclakn alhlabc lcalcn ; a;nbjbcbab anklnnakblbacj akblabc albbue ablbaclbn ckblbibc albcja lankcka ‘hiandkmakivprNauosnhaiih sualnd h ahbdk bdkbs lshdlbsdmslahdlkaskdl andimansi ldnslb albdsa choot sbsjd, dla, sae;nd sexlssd dlaaalalsnd s slae dlh shun ldblba ;NDKJBJbbc jsjb kabjo ksd msama jdjs u d ;oheavy beole fart hya sh huins hysgt hyuts huts khijoyd anlnainn skahdkndlabdka lahdkaklakdbl lah lb laf nlaflanfknfa laf lanfklnf alfnlna lanf lund dhe ,ma choor ak kndlsna sex dlnflnwf fl dsjldn aldlkahdioqew alfnalnf alfalfa fladoifh;zvnlkz poflnf lweflanvldip dvwv s oii nnw ijijih I hgu oj yufug g hgyggiu bhbjk h j hg bj bhj yuf tftj hvj jbkj hulyg ty rd s rt cf gv hvj hbj jbkjbk jh uhl yugk tf rd fxgch vhj hjb jh hl Dskjdkjddskdjnskjdnskjd sdkjsnkd kldnls m lsd dskd sd sd sd sl lc sclkls s dlslsddsldnlsnds dlsdsln ckd csd lds sld dl l dldckdn sldnlds slcldsn lsnlcns adilna alscjlana lakbei alhlhclakn alhlabc lcalcn ; a;nbjbcbab anklnnakblbacj akblabc albbue ablbaclbn ckblbibc albcja lankcka ‘hiandkmakivprNauosnhaiih sualnd h ahbdk bdkbs lshdlbsdmslahdlkaskdl andimansi ldnslb albdsa choot sbsjd, dla, sae;nd sexlssd dlaaalalsnd s slae dlh shun ldblba ;NDKJBJbbc jsjb kabjo ksd msama jdjs u d ;oheavy beole fart hya sh huins hysgt hyuts huts khijoyd anlnainn skahdkndlabdka lahdkaklakdbl lah lb laf nlaflanfknfa laf lanfklnf alfnlna lanf lund dhe ,ma choor ak kndlsna sex dlnflnwf fl dsjldn aldlkahdioqew alfnalnf alfalfa fladoifh;zvnlkz poflnf lweflanvldip dvwv s oii nnw ijijih I hgu oj yufug g hgyggiu bhbjk h j hg bj bhj yuf tftj hvj jbkj hulyg ty rd s rt cf gv hvj hbj jbkjbk jh uhl yugk tf rd fxgch vhj hjb jh hl What is E-commerce?E-commerce (electronic commerce or EC) is the buying andselling of goods and services, or the transmitting of funds or data, over anelectronic network, primarily the internet. These business transactions occureither as business-to-business, business-to-consumer, consumer-to-consumer orconsumer-to-business. The terms e-commerce and e-business are often usedinterchangeably. The term e-tail is also sometimes used in reference totransactional processes for online shopping.E-commerce in IndiaIndia has an internet user base of about 452 million as ofJuly 2017, 40% of the population.
Being the second-largest userbase in world,only behind China (651 million, 48.1% of population), the penetration ofe-commerce is low compared to markets like the United States (268 million,84.6%), or France (54.
1 Million, 81.2%), but is growing at an unprecedentedrate, adding around 6 million new entrants every month. The industry consensusis that growth is at an inflection point.In India, cash on delivery is the most preferred paymentmethod, accumulating 75% of the e-retail activities. Demand for internationalconsumer products (including long-tail items) is growing much faster thanin-country supply from authorised distributors and e-commerce offerings.
E-commerce Market in IndiaE-commerce in India market was worth about $4.89 billion in2010, it went up to $12.68 billion in 2013. In 2013, the e-retail segment wasworth US$2.31 billion. About 72% of India’s e-commerce market is travelrelated. According to Google In India, there were 36 million online shoppers inIndia in 2014 Q1 and was expected to cross 100 million mark by end of year2016.
CAGR vis-à-vis a global growth rate of 8–10.1%. Electronics and Apparelare the biggest categories in terms of sales.The Indian e-commerce industry has been on an upward growthtrajectory and is expected to grow at a Compound Annual Growth Rate (CAGR) of28 per cent from 2016-20 to touch US$ 63.7 billion by 2020 and overtake the USby 2034.1 The sector reached US$ 14.5 billion in 2016. The ongoing digitaltransformation in the country is expected to increase India’s total internetuser base to 829 million by 2021 (59 per cent of total population), from 373million (28 per cent of population) in 2016, while total number of networked devicesin the country are expected to grow to two billion by 2021, from 1.
4 billion in2016. Major developments in the Indian e-commerce sector are asfollows:• VentureCapital backed firms in India raised a record US$ 9.61 billion of fresh capitalbetween January-September 2017, which is more than twice the amount of capitalraised during the same period in the previous year.• BankBazaar,a financial marketplace start-up in India, raised US$ 30 million in a fundinground led by Experian Plc, a credit rating agency based in UK, taking thecompany’s total funding to US$ 110 million.
• Mr JeffBezos, Founder and Chief Executive Officer, Amazon Inc has announced plans tofurther increase its investments in the country to develop its infrastructureand technology. The e-commerce giant also received an approval from the ReserveBank of India (RBI) for launching its own digital payment wallet in India,thereby tapping into India’s fastest-growing digital payments business.• In April2017, India’s online retail giant, Flipkart, raised US$ 1.4 billion in thebiggest start-up funding round led by Tencent Holdings Ltd, eBay Inc andMicrosoft Corp. It also acquired eBay’s Indian arm as a part of the deal.
Thecompany also raised US$ 1 billion in March 2017 in a funding round led byChinese internet giant, Tencent and Microsoft, thereby valuing the start-up atUS$ 11 billion.• Paytm’se-commerce unit raised US$ 200 million in a funding round led by Chinesee-commerce giant, Alibaba and existing investor, SAIF Partners, to become theIndian unlisted company to be valued at over a billion dollars. • China’slargest e-commerce player Alibaba has planned to set up its first India officein Mumbai, in order to be a part of India’s growing e-commerce market, which isexpected to double to US$ 34 billion by 2017. Market Survey by Ernst and Young – Glimpse of Market Trendsand Market StructureTo better understand consumers’ online buying behaviour, EYpolled about 700 online respondents in six cities in India.
Consumer Trends according to EY report• 61% willstop buying online if there are no discounts.• 40% saidthat convenience was the most important reason for shopping online.• 30% saidtimely delivery and a good return policy are the reasons for online shopping. Payment trends according to EY report • 71% ofregular online shoppers prefer cashless transactions.• 64% ofonline shoppers have concerns about sharing credit card info.• 51% ofconsumers younger than 21 years prefer cash on delivery. Most Influential mode of communication according to EYreport• 74% ofconsumers younger than 21 years said social media influences buying decision.• 64% ofwomen said that family and friends influence buying decisions.
• 51% ofbuyers 55 and older said email and SMS offers influence their buying decision.India’s still-young e-commerce market has grown in partbecause of marketing strategies such as heavy discounts and free home delivery.However, this has come at the expense of profitability for many e-tailers.• 96% offemale consumers <21 years only buy when discounts are offered.• 86%regularly look for discounts.• 55% donot want to pay for home delivery.
Market Segmentation Porter’s Five Forces Framework Analysis ?Competition Two Major Business ModelsMarketplace Model• Marketplacemodel adheres to the standards and directions of a zero-inventory model. Forexample, Naaptol, eBay and Shopclues.• Thee-commerce marketplace becomes a digital platform for consumers and merchantswithout warehousing the products.
Marketplaces do offer shipment, delivery andpayment help to merchants by tying up with some selected logistics companiesand financial institutions.• The newFDI policy rules and regulations in the e-commerce market have permitted 100percent FDI in the e-commerce marketplace model under the automatic route. Issues with Market Place Model• Qualityof service, shopping, delivery and overall customer satisfaction tends to below.• When anyseller, regardless of quality, can sign up to be part of the Flipkart orSnapdeal marketplace, faulty delivery orders and fraud are likely to be commonoccurrences.
o Example:the famous incident of a man ordering a Samsung smartphone on Snapdeal andreceiving a bar of soap.• To dealwith it, Flipkart and Amazon have done is to create a ‘primary seller’; a wayof getting around the weaknesses of the marketplace model.• Flipkartand Amazon Managed to Comply with the FDI regulations on inventory-lede-commerce models while overcoming the weaknesses of a pure marketplace model. Amazon (marketplace model)• Amazonstarted practicing the market place model by launching its site in early 2013in India.• Itstarted registering electronic goods sellers and ended FY 2013 offering nearly15 million products.
• Known forits strong last mile delivery network.• AmazonIndia has set up a logistics arm named Amazon Logistics and started offeringsame day delivery. Inventory led Model• Inventoryled models are those shopping websites where online buyers choose from amongproducts owned by the online shopping company or shopping website take care ofthe whole process end-to-end, starting with product purchase, warehousing andending with product dispatch.• A fewexamples of such are Jabong, Yepme and LatestOne.com. Flipkart (inventory-led model) • Itstarted with a consignment model where goods were procured on demand.• Andturned into inventory e-retailer supported by registered suppliers.
• Thisprovides better control on the logistics chain.• Manages afine balance between inventory and cost of delivering goods. Competition in E-commerce New products and services are introduced very constantly,and opens a lot of opportunities to create a business and take a niche.
It’s easy to sell your products online if you’re one of thefirst on the market, but if you’re joining a market with established and strongmarket leaders, you’ll have to face a fierce competition.From the fall of a competitor to another investing into foodretail, 2017 has seen it all in the e-commerce space.Despite spending Rs 200 crore on re-branding in September2016, the Gurgaon-based company, Snapdeal, was unable to sustain the pressureof the e-commerce sector.Its merger plans with Flipkart also fell through andSnapdeal 2.
0 was announced with an aim of being profitable.The year of 2017 saw higher investments and some majortransformations with competitors scattering to close market share in ruralIndia.E-commerce reached the nooks and crannies of India’s Tier IIand Tier III cities, ending the monopoly of the metro cities. Amazon said itgrew 66% in sales volume owing to rapidly expanded market share in Tier II andTier III cities. Cash burn in the industry on account of heavy discounts bye-commerce sites was estimated to reach $370-400 million in 2017, as perRedSeer Research data.
Amazon’s GMV share fell from 32% in 2016 to 26% in 2017. US-based Amazon pulling out the big guns and investing $500million in food retail in India. Flipkart has also toyed with the idea of buying onlinegrocery site, Big Baskets. Latest developments in this regard include Alibaba,major Chinese e-commerce company, which is poised to buy Big Basket for animpending sum of $300 million, a report by Economic Times said.
Flipkart, which has raised $4 billion this year fromSoftbak, also tried its hand in the online grocery space with ‘Supermart’ inBangalore. India still has a long way to go when it comes to e-tailingwith the sector amounting to only 1% of entire retail activity in India, as perCare Ratings data. Market Share Analysis by Morgan Stanley GMV or gross merchandise value for e-commerce companiesmeans sale price charged to the customer multiplied by the number of itemssold.Online marketplace firms Flipkart and Snapdeal have managedto keep their top spots with a combined gross merchandise value (GMV) marketshare of 71 per cent, according to global brokerage firm Morgan Stanley.
According to the report, Flipkart bagged the top spot, witha GMV market share of 45 per cent, while Snapdeal came in second, with 26 percent. The report puts Amazon India at number three, with a GMV share of 12 percent. “The e-commerce market was dominated by the three largegeneral merchandise companies in 2015, with a combined GMV market share of 83per cent. It will be interesting to see how these market shares play out in2016 as Snapdeal, Amazon and Paytm have all raised their competitive intensityto close the gap with Flipkart,” it said in its report. The report says combined GMV of Flipkart, Snapdeal, andAmazon, stood at $13.8 billion in 2015, while that of the top-10 offlineretailers was $12.6 billion.According to Morgan Stanley, Shopclues was the mostcapital-efficient (GMV to total capital raised) online marketplace, followedclosely by Snapdeal and Paytm.
Some examples of consolidation were CarWale/CarTrade(automobile classifieds), Commonfloor/Quikr (real estate classifieds),TaxiForSure/Ola Cabs (taxi aggregators), and FreeCharge/Snapdeal (onlinerecharges).Currently, India has the second-largest internet populationin the world. We expect internet penetration to increase from 32 per cent in2015 to 59 per cent in 2020, translating to a near-doubling of the internetuser base,” it said. The report expects the number of online shoppers in Indiato grow to 320 million by 2020 from 50 million in 2015. Characteristics and Behavioural Traits of E-commerceIndustry Competition Flipkart was founded on 2007 by Sachin Bansal and BinnyBansal, both alumni of the Indian Institute of Technology Delhi. They workedfor Amazon.com, and left to create their new company incorporated in October2007 as Flipkart Online Services Pvt.
Ltd. Flipkart started by selling booksonline and popularised the idea of buying books online in India. Flipkart nowemploys more than 33,000 people. Flipkart were operating through a complexbusiness structure which included nine firms, some registered in Singapore andsome in India. In 2012 Flipkart co-founders sold WS Retail to a consortium ofinvestors led by Rajeev Kuchhal.Flipkart.com was honoured as the Young Turk of the Year atCNBC TV 18’s ‘India Business Leader Awards 2012’ (IBLA).
Amazon.com, Inc., doing business as Amazon is an Americanelectronic commerce and cloud computing company based in Seattle, Washingtonthat was founded by Jeff Bezos on July 5, 1994. The tech giant is the largestInternet retailer in the world as measured by revenue and marketcapitalization, and second largest after Alibaba Group in terms of total sales.The amazon.com website started as an online bookstore and later diversified tosell video downloads/streaming, MP3 downloads/streaming, audiobookdownloads/streaming, software, video games, electronics, apparel, furniture,food, toys, and jewelry. The company also produces consumer electronics—Kindlee-readers, Fire tablets, Fire TV, and Echo—and is the world’s largest providerof cloud infrastructure services. Amazon also sells certain low-end productsunder its in-house brand AmazonBasics.
We shall talk about Amazon in detail further in theanalysis. Snapdeal is an Indian e-commerce company based in New Delhi,India. The company was started by Kunal Bahl and Rohit Bansal in February 2010.As of 2014 Snapdeal had 300,000 sellers, over 30 million products across 800+diverse categories from over 125,000 regional, national, and internationalbrands and retailers and a reach of 6,000 towns and cities across the country.It received its first funding worth USD $12 million from Nexus Venture Partnersand Indo-US Venture Partners in January 2011. This was followed by anotherround in July 2011 worth USD $45 million from Bessemer Venture Partners andexisting investors. The third round of funding was worth USD $50 million andcame from eBay and other pre-existing investors.
Paytm is an Indian e-payments and e-commerce brand based outof Delhi NCR, India. Launched in August 2010, it is a consumer brand of parentcompany One97 Communications. The name is an acronym for “Payment ThroughMobile”. The company employs over 13,000 employees as of January 2017 andhas 3 million offline merchants across India. It also operates the Paytmpayment gateway and the Paytm Wallet.Among other sources of funding, in 2015, Paytm became thefirst Indian company to receive funding from Chinese ecommerce company Alibaba,after it raised over $1 million at a valuation of $1.5 billion.
The AlibabaGroup was the biggest stakeholder in Paytm parent company One97 Communications. ShopClues is an online marketplace owned by Clues NetworkPvt. Ltd. It was established in July 2011 in Silicon Valley by Sanjay Sethi,Sandeep Aggarwal and Radhika Aggarwal. The company claims to have over 6 lakhmerchants and 2.8 crore products on its platform, serving over 32,000 pincodesacross the country.
Valued at USD 1.1 billion,ShopClues has Tiger Global,Helion Ventures, and Nexus Venture Partners as major investors.In May 2016,joined hands with GoDaddy to assist its small and medium entrepreneurs instarting their own e-commerce websites. In January 2016, ShopClues raised USD100 million from Tiger Global Management and joined the Unicorn Club. In 2016,received the Gold Award at APAC Effie Awards for Ghar Wapsi campaign in Davidvs.
Goliath category. Other Key Players eBay is a multi-billion-dollar business with operations inabout 30 countries. The company manages eBay.com, an online auction andshopping website in which people and businesses buy and sell a wide variety ofgoods and services worldwide. The website is free to use for buyers, but sellersare charged fees for listing items after a limited number of free listings, andagain when those items are sold.
However, eBay was never able to make its markin the Indian market as it entered too early. It is said to be a player in themarket just for the sake of it. Jabong.com is an Indian fashion and lifestyle e-commerceportal founded by Praveen Sinha, Lakshmi Potluri, Arun Chandra Mohan and ManuJain. The portal sells apparel, footwear, fashion accessories, beauty products,fragrances, home accessories and other fashion and lifestyle products. Thecompanies headquarter is in Gurgaon, NCR. In July, 2016 Flipkart acquiredJabong through its unit Myntra for about $70 million.Myntra is an Indian fashion e-commerce marketplace companyheadquartered in Bengaluru, Karnataka, India.
The company was founded in 2007with a focus on personalisation of gift items. By 2010, Myntra shifted itsfocus to the online retailing of branded apparel. In May 2014, Myntra.comacquired by Flipkart to compete against Amazon.
Myntra and Jabong are now Flipkart’s subsidiaries and theirmarket share is counted under it. OLX Group is a global online marketplace (headquartered inAmsterdam, and owned by South African media and technology group Naspers),operating in 45 countries, and is the largest online classified ads company inIndia, Brazil, Pakistan, Bulgaria, Poland, Portugal and Ukraine. It was foundedby Alec Oxenford and Fabrice Grinda in 2006. Fabrice Grinda and Alec Oxenfordfounded the company as a Craigslist alternative for the world outside of theUnited States. South African media group Naspers, acquired a majority of OLX in2010 and 95% of the company in 2014.
Makemytrip Inc. is an Indian online travel company foundedin 2000. Headquartered in Gurgaon, Haryana, the company provides online travelservices including flight tickets, domestic and international holiday packages,hotel reservations, rail and bus tickets, etc. The company has been recognizedas one of India’s good travel portals. The company also operates through 65retail stores across 50 cities in India, along with offices in New York Cityand Sydney.
Makemytrip holds close to 25% market share of the OTA hotel bookingsegment. Yatra.com is an Indian online travel agency and a travelsearch engine based in Gurgaon, Haryana, founded by Dhruv Shringi, Manish Aminand Sabina Chopra in August 2006. In April 2012, it was the second largestonline travel website in India, with 30 per cent share of the ?370 billion(US$5.
8 billion) market for all online travel-related transactions. It alsolaunched a “holiday-cum-shopping card” with State Bank of India(SBI), India’s largest bank. Yatra.com publicly listed on the NASDAQ under theticker symbol YTRA in December 2016.