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India's e-commerce market grew at a staggering 88 per cent in 2013 to USD 16 billion, riding on booming online retail trends and defying slower economic growth and spiraling inflation.
WHY: The increasing Internet penetration and availability of more payment options boosted the e-commerce industry in 2013. Unique to India (and potentially to other developing countries), cash on delivery is a preferred payment method. India has a vibrant cash economy as a result of which 80% of Indian e-commerce tends to be Cash on Delivery. According to the survey, India's e-commerce market, which stood at $2.5 billion in 2009, reached $8.5 billion in 2012 and rose 88 per cent to touch $16 billion in 2013. The survey estimates the country's e-commerce market to reach USD 56 billion by 2023, driven by rising online retail. As per responses by traders and organised retailers who participated in the survey, online shopping grew at a rapid pace in 2013 due to aggressive online discounts, rising fuel prices and availability of abundant online options.To make the most of increasing online shopping trends, more companies are collaborating with daily deal and discount sites. The prominent points like ease of shopping from home, home delivery, no traffic congestions to be faced are some of the factors helping E-commerce industry grow in India.
And then there are factors which is hampering E-commerce growth in India like lack of trust , not able to touch and feel the item which consumers want to purchase etc. Let us see one very interesting infographic about why people do not buy online in India.
WHAT: The products that are sold most are in the tech and fashion category, including mobile phones, ipads, accessories, MP3 players, digital cameras and jewellery, among others.
WHO: According to a survey, India has Internet base of around 150 million as of August, 2013. Among the cities, Mumbai topped the list of online shoppers followed by Delhi, while Kolkata ranked third! In which, 65% of online shoppers are male while 35% are female.
Besides,age-wise analysis revealed that 35% are aged between 18-25 years, 55% between 26-35 years, 8% in the age group of 36-45 years, while only 2% are in the age group of 45-60 years. Having close to 10 per cent of Internet penetration in India throws a very big opportunity for online retailers to grow and expand as future of Internet seems very bright.
WHERE: Top 10 Online stores in India are:
1. Flipkart- is an Indian e-commerce company founded in 2007, by Sachin and Binny Bansal and head-quartered in Bangalore, Karnataka. It is considered as the e-commerce company that made online shopping popular in India. Though e-commerce investment opportunities are shrinking in past 1.5 years, Flipkart continue to be dominant player in the online shopping in the sub-continent. In last 3 years nearly 53 e-commerce Indian firms have raised $853M from venture capital, but only 11 have managed to raise further rounds of funding. They are continuously proving themselves to be gigantic, unbeatable leader in e-commerce (India) and shutting down all doors for new or existent competitors, there by alarming possibility of ‘’Lets Shop it’’ being replaced soon by ‘’Lets Flip-kart it’’ in near future,
2. eBay India- is stepping up investment in India to boost its share of a market dominated by domestic players such as Flipkart and fend off encroachment from arch-rival Amazon.com. The e-commerce company dipped a toe into the Indian market seven years ago and stuck with a cautious approach, even as local upstarts made splashy grabs for business in a tiny but growing market.,
3. Snapdeal- started in February 2010 as a daily deals platform but expanded in September 2011 to become an e-commerce company via a marketplace model.With 20 million registered users, SnapDeal is one of the first and largest online marketplace in India offering an assortment of 4 million+ products across diverse categories from over 20,000 sellers, shipping to 4000 towns and cities in India.In the 3rd round of funding of $50 million eBay came out as the largest investor in Snapdeal.The investment also includes a commercial partnership under which eBay will get access to Snapdeal’s 20 million registered users, logistics software and distribution network.from its co-founder we came know that Snapdeal will offer a limited number of products on eBay India and eBay too will list its merchandise on Snapdeal, following the partnership,
4. Amazon India- market place is a platform where third party retailers can sell books, movies and TV shows. Entry of Amazon in the Indian market will increase competition for existing market leaders like Flipkart.
5. Myntra- established by Mukesh Bansal, Ashutosh Lawania, and Vineet Saxena in February 2007, it has been funded by Venture Capital funds like IndoUS, IDG & Accel Partners. It currently offers products from more than 350 Indian and international brands in fashion and casual lifestyle products,
6. Shopclues- is an online retail website, headquartered in Gurgaon, India. The company was founded in the Silicon Valley, USA. As per the citation, ShopClues joined as 35th entrant in the Indian e-commerce in 2011 and is reported to have made its way to the list of the top 6 and is known to be popular among shoppers in the 18–24 years age group who regularly shop from the wide assortment of items including mobile phones, laptops, tablets, electronics,home décor, footwear, apparel, fashion accessories, books & music, etc.,
7. Domino's- domino's pizza is a familiar pizza chain in the world and you can order pizza online. Domino's India group was very successful in offering its services through Cash on Delivery.This company shipped about 3.7 crore pizzas in the year, equaling to 1 lakh pizzas sold per day.The pizzas sold for a total of Rs 600 crore, translating into an average price of Rs 162 per pizza.The business operated via 380 stores in 90 cities; that is, approximately four stores per city. Each store sold approximately 1 lakh pizzas a year or about 300 pizzas a day. That’s about 25 pizzas an hour. The company recorded a net profit of Rs 90 crore. This equals to Rs 25 per pizza or a 15 per cent margin on the sale price. thus proving that CoD is not too bad for an online store ,
8. freecharge- was started in August, 2010 by Kunal Shah of Accelyst Solutions Pvt. Ltd. It provides online facility to recharge any prepaid mobile phone in India. By January 2012, the number of registered users of the website were 1.5 million which increased to 2.8 million by November 2012. The company currently has a patent pending status for its business model., It provides online facility to recharge any prepaid mobile phone in India. The amount paid by the user for recharge is returned in form of shopping coupons of some of the top retailers in India, thereby making the recharge virtually free.
9. Jabong- is an Indian fashion and lifestyle e-commerce portal, started operations in January 2012. It retails apparel, footwear, accessories, beauty products, fragrances, home accessories and other fashion and lifestyle products. The company is headquartered in Gurgaon, NCR. In March 2013, Jabong was shipping 6000-7000 orders a day. In March 2013, the annual revenues of Jabong was estimated to be 100-150 mn USD. In less than 20 months, Jabong.com became the third-most visited online shopping website.During September 2013 Jabong was shipping 14000 orders on daily basis out of which 60% were from small towns.and
10. Tradus- is an online auction company that operates in Europe. The company, a subsidiary of South African media group Naspers since March 2008, operates across Europe using many different brands. Tradus operates a business model similar to eBay. Therefore it tends to concentrate in countries where eBay is either not present nor is the market leader and where Tradus is (or can be) market leader.
9. Jabong- is an Indian fashion and lifestyle e-commerce portal, started operations in January 2012. It retails apparel, footwear, accessories, beauty products, fragrances, home accessories and other fashion and lifestyle products. The company is headquartered in Gurgaon, NCR. In March 2013, Jabong was shipping 6000-7000 orders a day. In March 2013, the annual revenues of Jabong was estimated to be 100-150 mn USD. In less than 20 months, Jabong.com became the third-most visited online shopping website.During September 2013 Jabong was shipping 14000 orders on daily basis out of which 60% were from small towns.and
10. Tradus- is an online auction company that operates in Europe. The company, a subsidiary of South African media group Naspers since March 2008, operates across Europe using many different brands. Tradus operates a business model similar to eBay. Therefore it tends to concentrate in countries where eBay is either not present nor is the market leader and where Tradus is (or can be) market leader.
Despite of growth in ecommerce industry in India, many companies are losing the battle! according to an analysis, its said the CoD model in India is the main cause of the shut downs.
About 100 to150 e-commerce ventures have folded up in 2011. Over two dozen have already shut shop this year. The mortality rate is high, especially among the e-retailers, and we expect the numbers to increase manifold this year. The market structure right now doesn't allow profitability and hence not a single company in the space has posted profits so far. Price war among the firms, many of whom burned huge cash on promotions and marketing, ended up going under or getting acquired by larger players.
One of the other major factor apart from price war is cash on delivery mode which hurts bottom line of cos like Flipkart, Snapdeal due to extra associated costs. Ecommerce companies may be growing at an explosive pace, but their overdependence on cash-on-delivery mode of payment remains worrisome, particularly since online retail ventures in India are not yet profitable.Cash-on-delivery, where customers pay for products at the time of receiving them, still accounts for up to 60% of transactions, according to a study by Internet and Mobile Association of India and audit firm KPMG. This, despite sales at some of these ventures expanding at over 500% annually. With the additional processes required for cash-on-delivery orders, their longer payment cycle, higher instances of returns and associated costs are hurting margins.These transactions add about 3% additional costs which translates to an increase in cost by at least 30 per transaction for E-commerce companies. "Extra costs are incurred for the additional verification calls for cash-on-delivery orders, collection charges by courier companies as well as two-way transportation charges in case of returned goods.The problem of returns is that we have to bear the courier charges for the return and goods can get damaged during the returns process." says the business head!
One of the other major factor apart from price war is cash on delivery mode which hurts bottom line of cos like Flipkart, Snapdeal due to extra associated costs. Ecommerce companies may be growing at an explosive pace, but their overdependence on cash-on-delivery mode of payment remains worrisome, particularly since online retail ventures in India are not yet profitable.Cash-on-delivery, where customers pay for products at the time of receiving them, still accounts for up to 60% of transactions, according to a study by Internet and Mobile Association of India and audit firm KPMG. This, despite sales at some of these ventures expanding at over 500% annually. With the additional processes required for cash-on-delivery orders, their longer payment cycle, higher instances of returns and associated costs are hurting margins.These transactions add about 3% additional costs which translates to an increase in cost by at least 30 per transaction for E-commerce companies. "Extra costs are incurred for the additional verification calls for cash-on-delivery orders, collection charges by courier companies as well as two-way transportation charges in case of returned goods.The problem of returns is that we have to bear the courier charges for the return and goods can get damaged during the returns process." says the business head!
