E-commerce in India

From Wikipedia, the free encyclopedia
Jump to: navigation, search

India has an internet user base of about 375 million (30% of population) as of Q2 of 2015.[1] Despite being the second largest userbase in world, only behind China (650 million, 48% of population), the penetration of e-commerce is low compared to markets like the United States (266 M, 84%), or France (54 M, 81%), but is growing at an unprecedented rate, adding around 6 million new entrants every month.[2] The industry consensus is that growth is at an inflection point.[3]

In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities.[4] Demand for international consumer products (including long-tail items) is growing much faster than in-country supply from authorised distributors and e-commerce offerings.

Several Indian e-commerce companies have managed to achieve billion-dollar valuations, including Flipkart, Snapdeal, InMobi, Quikr, OlaCabs, Shopclues and Paytm.[5][6]

Market size and growth[edit]

India's e-commerce market was worth about $3.9 billion in 2009, it went up to $12.6 billion in 2013. In 2013, the e-retail segment was worth US$2.3 billion. About 70% of India's e-commerce market is travel related.[7] According to Google India, there were 35 million online shoppers in India in 2014 Q1 and is expected to cross 100 million mark by end of year 2016.[8] CAGR vis-à-vis a global growth rate of 8–10%. Electronics and Apparel are the biggest categories in terms of sales.

Key drivers in Indian e-commerce are:

  • Large percentage of population subscribed to broadband Internet,[9] burgeoning 3G internet users, and a recent introduction of 4G across the country.[10][11]
  • Explosive growth of Smartphone users, soon to be world's second largest smartphone userbase.[12]
  • Rising standards of living as result of fast decline in poverty rate.
  • Availability of much wider product range (including long tail and Direct Imports) compared to what is available at brick and mortar retailers.
  • Competitive prices compared to brick and mortar retail driven by disintermediation and reduced inventory and real estate costs.
  • Increased usage of online classified sites, with more consumer buying and selling second-hand goods
  • Evolution of Million-Dollar startups like Jabong.com, Saavn, Makemytrip, Bookmyshow, Zomato Etc.

India's retail market is estimated at $470 billion in 2011 and is expected to grow to $675 Bn by 2016 and $850 Bn by 2020, – estimated CAGR of 10%..[citation needed] According to Forrester, the e-commerce market in India is set to grow the fastest within the Asia-Pacific Region at a CAGR of over 57% between 2012–16.[13]

As per "India Goes Digital",[14] a report by Avendus Capital, a leading Indian Investment Bank specializing in digital media and technology sector, the Indian e-commerce market is estimated at Rs 28,500 Crore ($6.3 billion) for the year 2011. Online travel constitutes a sizable portion (87%) of this market today. Online travel market in India is expected to grow at a rate of 22% over the next 4 years and reach Rs 54,800 Crore ($12.2 billion) in size by 2015. Indian e-tailing industry is estimated at Rs 3,600 crore (US$800 mn) in 2011 and estimated to grow to Rs 53,000 Crore ($11.8 billion) in 2015.

Overall e-commerce market is expected to reach Rs 1,07,800 crores (US$24 billion) by the year 2015 with both online travel and e-tailing contributing equally. Another big segment in e-commerce is mobile/DTH recharge with nearly 1 million transactions daily by operator websites.[citation needed]

New sector in e-commerce is online medicine. Company like Reckwing-India, Buyonkart, Healthkart already selling complementary and alternative medicine where as NetMed has started selling prescription medicine online after raising fund from GIC and Steadview capital citing[15] there are no dedicated online pharmacy laws in India and it is permissible to sell prescription medicine online with a legitimate license.


Though the sector has witnessed tremendous growth and is expected to grow, a lot of e-commerce ventures have faced tremendous pressure to ensure cash flows. But it has not worked out for all the e-commerce websites. Many of them like Dhingana, Rock.in, Seventy MM amongst others had to close down [16] or change their business models to survive.[17]


There are many hosting companies working in India but most[citation needed] of them are not suitable for eCommerce hosting purpose, because they are providing much less secure and threat protected shared hosting. eCommerce demand highly secure, stable and protected hosting.[citation needed] Trends are changing with some of eCommerce companies starting to offer SaaS for hosting webstores with minimal one time costs.

There could be various methods of ecommerce marketing such as blog, forums, search engines and some online advertising sites like Google adwords and Adroll.

India has got its own version of Cyber Monday known as Great Online Shopping Festival which started in December 2012, when Google India partnered with e-commerce companies including Flipkart, HomeShop18, Snapdeal, Indiatimes shopping and Makemytrip. "Cyber Monday" is a term coined in the USA for the Monday coming after Black Friday, which is the Friday after Thanksgiving Day.[18] Most recent GOSF Great Online Shopping Festival was held during Dec 10 to 12, 2014.

In early June 2013, Amazon.com launched their Amazon India marketplace without any marketing campaigns.In July, Amazon had said it will invest $2 billion (Rs 12,000 crore) in India to expand business, after its largest Indian rival Flipkart announced $1 billion in funding.[19] Amazon has also entered grocery segment with its Kirana now in bangalore and is also planning to enter in various other cities like Delhi, Mumbai and Chennai and faces stiff competition with Indian startups.


As of 2012, most of the e-commerce companies are yet to start making money. However, due to their growth prospects, many venture capital firms such as Accel Partners have invested considerably. In one of the biggest fund raising, Flipkart.com, till November 2014, has raised about USD 2.3 billion.[20] Entertainment ticketing website BookMyShow.com raised ₹100 crores investment by Accel Partners.[21]

On 10 July 2013, Flipkart announced it had received $200 million from existing investors Tiger Global, Naspers, Accel Partners, and ICONIQ Capital. New investors making up the additional $160 million include Dragoneer Investment Group, Morgan Stanley Wealth Management, Sofina, Vulcan Inc. and more from Tiger Global.[22]

Snapdeal - USD 50 million on 13 April.

Pepperfry - USD 100 million investment from Goldman Sachs, others.

In February 2014, online fashion retailer Myntra.com raised $50 million from a group of investors led by Premji Invest, the investment company floated by Azim Premji, Chairman of Wipro. May 2014 also witnessed an acquisition of Myntra by Flipkart reportedly for ₹2,000 crores.[23]

In October 2014, KartRocket, an Indian e-commerce platform, announced granting of a Series A round led by technology investor Nirvana Venture Advisors and 500 Startups, together with Tokyo-based Beenos, previously known as Netprice.com.[24]

In July 2015, price comparison service website MySmartPrice raised $10 million from Accel Partners and Helion Venture Partners.
In September 2015, PepperTap raised $36 million from Snapdeal and others.[25]

Started in 2012, Hopscotch India focuses on bringing thousands of brands to moms in India. They have raised USD 12.8 Million in 2 rounds from 7 investors, including Facebook Cofounder Eduardo Saverin [26]

Started in 2011, voylla online first digital fashion jewellery, Jaipur-based fashion jewellery brand Voylla has raised $15 million (About Rs 98 crore) in funding from private equity firm, Peepul Capital.[27]

Niche Retailers[edit]

The spread of e-commerce has lead to the rise of several niche players who largely specialize their products around a specific theme. As many as 1,06,086 websites are registered daily and more than 25% are for niche businesses.[28]

During 2014, Royal Enfield sold 200 Bike's of special series Online.

Zepo compiled popular online niche brands in their list of Top 100 Quirky Brands in India.[29]

Online apparel is one of the more popular verticals, which along with Computers and consumer electronics make up 42% of the total retail e-commerce sales.[30] Niche online merchandising brands like Headbanger's Merch, Redwolf and No Nasties partner with and even help sustain independent musicians.[31] Some established brands like Arvind are now creating clothing lines just for the e-commerce markets.[32][33] Some of the bigger online retailer like VoxPop Clothing have secured multiple rounds of funding, the last round raising $1 million from Blume Ventures in 2014.[34]

As these niche businesses get popular, they are slowly getting acquired by the big players. BabyOye was acquired by Mahindra Retail, part of the $17 billion Mahindra Group.[35] Ekstop was acquired by the Godrej Group to complement their offline chain of Nature's Basket stores.[36]

See also[edit]


  1. ^ [1]
  2. ^ "Online shoppers in India". timesofindia.indiatimes/tech. 2014-11-20. Retrieved 2015-03-25. 
  3. ^ "Indian e-commerce at inflection point?". Vccircle.com. 2010-08-19. Retrieved 2013-07-04. 
  4. ^ "In COD we trust". translatemedia.com. 2015-02-06. Retrieved 2015-03-24. 
  5. ^ [2]
  6. ^ http://www.hindustantimes.com/business/231-million-in-5-rounds-that-s-how-shopclues-entered-1-billion-club/story-1ZwRMYkLpy2nFv44t2SVuM.html
  7. ^ Evolution of e-commerce in India, PwC, 2014.
  8. ^ Consumer E-commerce in India
  9. ^ "India broadband penetration growth". Internetworldstats.com. Retrieved 2013-07-04. 
  10. ^ [3]
  11. ^ PTI 29 August 2010, 02.22pm IST (2010-08-29). "E-commerce growth with 3G". Economictimes.indiatimes.com. Retrieved 2013-07-04. 
  12. ^ [4]
  13. ^ "Asia Pacific Online Retail Forecast, 2011 To 2016," Forrester Research Inc. Zia Daniell Wigder, with Steven Noble, Vikram Sehgal and Lily Varon.
  14. ^ http://www.avendus.com/Files/India_goes_Digital.pdf
  15. ^ "Online pharmacy Netmeds scheduled to go live by next week - The Economic Times". Retrieved 2015-10-03. 
  16. ^ "Discounts backfire; many e-com ventures shut shop". Business Standard. 26 February 2014. Retrieved 9 December 2014. 
  17. ^ "Latest e-commerce shut downs and acquisitions in India". 17 May 2014. Retrieved 4 January 2015. 
  18. ^ "Google partners e-commerce sites for 'Cyber Monday' on December 12". Economic Times. 4 December 2012. Retrieved 31 December 2012. 
  19. ^ "Amazon adds India to its risk factors". PTI. 3 Nov 2014. 
  20. ^ "Fund-raise values Flipkart at $10 billion". Times of India. 24 Nov 2014. 
  21. ^ "Online shopping touched new heights in India in 2012". Hindustan Times. 31 December 2012. Retrieved 31 December 2012. 
  22. ^ "Flipkart raises $160M more from Morgan Stanley, Vulcan Capital, Tiger Global, others". VCCIRCLE. 
  23. ^ http://timesofindia.indiatimes.com/tech/tech-news/Flipkart-acquires-Myntra/articleshow/35472797.cms
  24. ^ Ikeda, Masaru (23 October 2014). "Japan’s Beenos joins $2M investment round in India’s e-commerce enabler KartRocket". The Bridge. Retrieved 5 December 2014. 
  25. ^ http://economictimes.indiatimes.com/industry/services/retail/peppertap-raises-36-million-in-fresh-round-of-funding-led-by-snapdeal/articleshow/49151863.cms
  26. ^ https://www.crunchbase.com/organization/hopscotch-4#/entity
  27. ^ economictimes.indiatimes.com/news/e-commerce/e-tailing/voylla-com-raises-15-million-from-peepul-capital
  28. ^ http://www.financialexpress.com/article/companies/taking-flight/67376/
  29. ^ http://www.zepo.in/blog/2013/05/07/top-quirky-brands-india-online-shopping/
  30. ^ http://www.assocham.org/newsdetail.php?id=4814
  31. ^ http://rollingstoneindia.com/sahil-makhija-at-some-point-a-t-shirt-will-always-outweigh-a-cd/
  32. ^ http://www.livemint.com/Companies/3uszeyGVQaEFwVJSVDqPpN/Arvind-lines-up-select-brands-for-online-retail.html
  33. ^ http://elanstreet.com/blog/firstlook_shuffle/
  34. ^ http://articles.economictimes.indiatimes.com/2014-11-14/news/56093182_1_blume-ventures-higher-margins-brands
  35. ^ http://articles.economictimes.indiatimes.com/2015-03-15/news/60137483_1_mahindra-retail-stores-babyoye-com
  36. ^ http://www.livemint.com/Companies/nItZXprEHzlavjUoc86oEL/Godrej-Natures-Basket-buys-online-grocer-Ekstopcom.html