The Singles' Day sale was originally named because the date Nov.

11 has four singles (11/11)

was started as a joke between university students, but Alibaba.com later converted it as a day
when singles can shop.

Late on Tuesday, Alibaba came close to generating double digit sales on Singles Day, clocking
an impressive $9 billion (Rs 55,000 crore), and beating its own record of $5.9 billion last year.

But to really put those numbers in context, consider this: Indias entire e-commerce industry was
worth only $11 billion in 2013. Of this, a mere $2 billion was from sales of physical goods,
whereas most of Alibabas $9 billion in sales came from actual goods rather than services.

In a report on e-commerce, however, broking firm Motilal Oswal says that this is just the start of
a multi-year growth for the e-commerce sector in India. Indian retailers, therefore, do not have to
be too concerned as despite strong growth in USA and China, e-tailing is still only 5-6% of total
retail sales there.

Here are five interesting insights from the report.

1. India is almost 10 years behind China in the e-commerce space. Chinas inflection point was
reached in 2005 when its size was similar to Indias current market size. Thankfully for India the
dynamics currently are similar to what existed in China then growing broadband penetration,
acceptance of online marketplaces, and lack of physical retail infrastructure in many places.

2. Forget the Flipkarts, Snapdeals and Amazons. Travel is where the real money in Indias e-
commerce is. Online travel accounts for nearly 71% of e-commerce business in India. This
business has grown at a compounded annual growth rate (CAGR) of 32% over 2009-13. E-
tailing, on the other hand, accounts for only 8.7% of organised retail and a minuscule 0.3% of
total retail sales. Even within sales of physical goods, books are a mere 7% of total book sales,
mobile phones are 2% of all handsets sold, and fashion goods sold online are just 1%. Online
jewellery sales account for only 0.2 per cent of all jewellery sold. Motilal Oswal, however,
expects e-tailing to pick up with a focus on fashion.

3. Alibaba is an outlier when it comes to margins and making money in the e-

commerce ecosystem. The Chinese company makes an operating profit of 40% compared to
industry standard (US and China) of 8-10%. Travel sites typically make 2.3%. Amazon, the
industry pioneer, is yet to achieve healthy profitability even after two decades of dominance.
Indian players, the report points out, are not even thinking of profitability yet. Its a game of
market share and market penetration, causing all serious players to have a war chest ready for
when the industry scales multiple times.

4. For every Rs 100 spent on e-tailing, Rs 35 is spent on supporting services like warehousing,
payment gateways, and logistics, among others. Delivery costs a platform owner 8-10%
implying significant burn. Though 50-60% of delivery logistics today are handled by large e-
tailers themselves, this proportion may reduce going forward as the participation of lower tier
cities picks up. Presently, aggressive pricing in India is leading to e-tailers making losses on
every segment. For a Rs 100 sale of a book, the e-tailer incurs a loss of Rs 24, a loss of Rs 13 in
mobiles, and Rs 8 in apparel.

5. Demand in India exists across 4,000-5,000 towns and cities, but there is no significant
presence of physical retail in almost 95% of these. High real estate cost is one of the main
reasons why organised retail is unable to expand at speeds expected earlier. Real estate as a
percentage of sales is 14 times higher than in the US. For large retailers in India, it is 7% of sales
as compared to 0.5% for Walmart.

cenario Indian E-commerce Timeline E-commerce categories E-commerce Industry: Key players
E-commerce Industry: Classification E-commerce Industry: Growth

2. Table of Content E-commerce Industry: Apparel E-commerce Industry: pharmacy E-

commerce Industry: Recent trends Conclusion E-commerce Industry: Future outlook E-
commerce Industry: challenges and issues

3. Introduction to E-Commerce Industry in India The E-Commerce industry is one of the most
progressive sectors of the economy. The e-commerce market has changed the way business is
transacted, whether in retail or business-to-business, locally or globally. Despite being a
developing country, India has shown a commendable increase in the e-commerce industry in the
last couple of years, thereby hitting the market with a boom. Though the Indian online market is
far behind the US and the UK, it has been growing at a fast page. Today, the online shopping has
become a trend in India and the reason behind the adoption of this technique lies in the attractive
online websites, user friendly interface, bulky online stores with new fashion, easy payment
methods (i.e. secure pay online via gateways like PayPal or cash-on-delivery), no bound on
quantity & quality, one can choose the items based on size, color, price, etc. The Key drivers of
Indian E-commerce have been: Increasing broadband Internet and 3G penetration. Growing
Living standards Availability of much wider product range Busy lifestyles and lack of time
for offline shopping Increased usage of online categorized sites Evolution of the online
marketplace model with websites like eBay, Flipkart, Snapdeal, etc.

4. E-Commerce Industry In India Worth $13.5 Billion In 2014 and predicted that it will Cross
$16 Billion In 2015. According to the latest report by IAMAI and IMRB International, the E-
Commerce industry in India reached a value of INR 81,525 crore (US$13.5 billion) in 2014. The
rapid increase in the use of smartphones and internet services has earned India a place among top
20 developing countries on the global forum, as stated by AT Kearney in its 2014 Global retail
development Index (GRDI). Consumer behavior has changed rapidly and visiting a local store to
buy a mobile phone is now more of a pain. While Flipkart, Snapdeal and Amazon have been
touted as the major players in this industry, the report shows that Travel industry comprised
almost 61% of the total E-Commerce market. Similarly, e-Tailing grew by 1.4 times since 2013
taking up almost 29% of the E-Commerce market share in India. 81,525 Cr Digital Commerce
31,475 Cr Online Non Travel 50,050 Cr Online Travel 24,046 Cr E- Tailing 896 Cr Matrimony
& Classifieds 2,025 Cr Other Services 4,508 Cr Financial Services Source: IMRB I-Cube 2014,
All India Estimates, December 2014 Introduction to E-Commerce Industry in India Continue.....

5. 0 20,000 40,000 60,000 80,000 100,000 120,000 2010 2011 2012 2013 2014 2015E 26,263
35,142 47,349 53,301 81,525 108,428 Growth of Digital Commerce (INR Crores) Growth of
Digital Commerce (INR Crores) Source: IMRB I-Cube 2014, All India Estimates, December,
2014 According to the report was prepared by IAMAI in association with IMRB International. It
is estimated that Overall, transactions worth Rs 81,525 crore happened in 2014, which is 53%
more compared to 2013. The report estimates that the industry will grow at a rate of 33% in the
next 12 months, which makes the overall market to be valued at Rs 1,08,428 crore by the time
2015 ends with 53 per cent growth. Introduction to E-Commerce Industry in India Continue.....

6. E-commerce Industry: Current Scenario 1Cited from Internet Usage Statistics - The Internet
Big Picture - World Internet Users and Population Stats available at
http://www.internetworldstats.com/stats.htm (last visited on January 22, 2015) 2Cited from The
Indian Telecom Services Performance Indicators (April June 2014) available at
http://www.trai.gov.in/WriteReadData/PIRReport/ Documents/Indicator%20Reports%20-
%20Jun-14.pdf (last visited on January 22, 2015)
3http://blogs.wsj.com/indiarealtime/2014/10/15/mobile-shopping-set-to-dominate-indias-e-
commerce-market/ (last visited on January 22, 2015). E-commerce in India is still in growing
stage, but even the most-pessimistic projections indicate a boom. Today e- commerce has
become an integral part of everyday life. Accessibility to e-commerce platforms is not a privilege
but rather a necessity for most people, particularly in the urban areas. The first E-Commerce site
in India was rediff.com. It was one of the most trafficked portals for both Indians and non-
residents Indians. It provided a wealth of Indian related business news a reach engine, e-
commerce and web solution services. Today the number of internet users in the world is close to
3 billion.1 Out of this, India has a total of 259.14 Million internet and broadband subscribers.2
This penetration of internet coupled with the increasing confidence of the internet users to
purchase online, has led to an enormous growth in the e-commerce space, with an increasing
number of customers registering on e-commerce websites and purchasing products through the
use of mobile phones.3 It is not surprising, therefore, that India is in a prime position for the
growth and development of the e- commerce sector. In particular, e-commerce presents one of
the greatest opportunities in the retail sector. The mergers and acquisitions are also taking place
in e-commerce domain. The flipkart - myntra deal of about 2000 crore has resulted in huge
growth in merger and acquisition transactions. IRCTC which deals with online ticketing of the
Indian railways has transformed railway ticketing in India to the extent that it is largest e-
commerce portal in the SAARC region. Its convenience and ease of use has made this portal
popular and changed the face of online booking with high confidence of its users.

7. E-commerce Industry: Current Scenario Continue..... India is on route to becoming the worlds
fastest growing e-commerce market, if current projections are anything to go by. This growth
story is being driven by robust investment activity in the sector and the rapid increase in internet
users. Internet users in India have gone up from 50mn in 2007 to 300 million in 2014. Once upon
a time, there was nothing like online shopping in India. With an internet user base of about 250.2
million as of June 2014 and a $400 billion industry to tap, India is the hottest destination for
online retailers. Out of the current market size of $16bn, travel bookings with $9bn has the lion
share of the market. Airlines accounts for 56 per cent, rail 34 per cent and hotel and others 10 per
cent. The best example of successful Indian e- commerce is a government venture. The Indian
Railways booking site IRCTC had $ 3bn GMV in 2014 with online bookings now accounting for
43% of all bookings. Its success indicates that the Indian consumer is willing to accept
technology if it is a compelling value proposition. Presently the Indian Government has allowed
100% FDI in B2B e-commerce, while business-to-consumer (B2C) is prohibited. In addition to
that theres a compulsory 30% local sourcing norms for foreign players.

8. 71% 18% 6% 5% 2% Online Purchasing Online Travel E-Tail Financial Services Classifieds
Other Source: World Bank, IAMAI, Aranca, Deutsche Bank Most online spend today is focused
on travel. Estimates put online travel (rail, air, bus, hotel, and tours) at 71% of e- commerce
spend, with B2B/B2C e-commerce at 5%. Within online travel, air travel is 50-60% of spend.
Online purchasing for bus travel is small compared to air travel. Only 2% of online spend for
travel is on bus tickets. Penetration rate in spend on bus travel is small relative to air travel.
RedBus estimates that only 9% of spending on bus tickets is through online bookings, compared
to 35% of air travel in India. E-commerce Industry: Current Scenario Continue.....

9. There are hundreds of other ecommerce websites in India but we have tried to assemble the
game changers of the Industry. Lets have a look on the timeline of Giants emergence in the
Industry. 2000: Indiatimes Shopping - Under prestigious Times Group, it operated as a
marketplace model, like eBay, with sellers being allowed to sell directly on the website under
their name and warranty. online shopping started here at a big level. A taste of online shopping
was served here. Elegant and powerful till date. 2005: Ebay.in - This multi billion dollar
company made its debut through Baazee.com and understood the potential of Indian online
market. 2007: Infibeam.com - Launched in year 2007, it now collects a whooping revenue of 10
billion rupees. This online portal was first in its league. The best part is that its founder sold all
his asset just to start this company with no external venture capital funding. 2007: Flipkart.com -
Launched in year 2007, because of it, Amazon is now fighting its own employee built rival
company. Flipkart.com is the dragon of online shopping in India. 2007: Myntra.com - It was
launched in year 2007 now merged with Flipkart.com to fight Amazon.in, Myntra have a
brilliant tap over the customers who love fashion & variety. 2007: Inkfruit.com - A 'hatke' site,
launched in 2007 focused on trend and redefining style. It later merged with Zovi.com to
compete harder with the fast growing competition in Indian Retail market. 2008:
Homeshop18.com - Again a 2008 product Homeshop18 has grown from Television to laptop.
This portal is a unique experience in itself. The deals are so lavishing that you cant take you eyes
off them. It was launched 7 years ago at 24X7 T.V. channel selling products through Anchors.
Later in 2011 it was launched as a website. 2010: Snapdeal.com - Five years ago with four
square growth, started as a deal and coupon site, Snapdeal soon switched to became an
ecommerce portal to harnessing the power of online retailing. And now it stands as a
multimillion company regulating tides of online retailing. 2012: Jabong.com - It has been 3 years
since its inception but the brilliant service and amazing understanding of customer needs have
turned this online shopping portal into a nuclear of e-retailing in India. It majorly focus on Tier-
II & Tier-III cities. 2013: Amazon.in - Came in 2003 and plunged a $2 billion investment to
crush the competition and grow. This is in fact the spice of worlds largest online retailer fighting
in India for its dominance. Indian E-commerce Timeline

10. Indian E-commerce Timeline Continue..... 2000 2002 2004 2006 2008 2010 2012 2014 Year
Year

11. E-commerce Industry: Classification E-Commerce E-Tail (Flipkart, Jabong, Snapdeal,

Myntra, etc.) Other (Mydala, Pay Point India, DTDC, etc.) Classifieds (Bharat Matrimony,
People Group, Zomato, Quikr, etc.) Travel (MakeMyTrip, Yatra, Redbus, IRCTC, etc.)

12. E-Tail E-retailing in India is booming at a great pace with the current market value being
$2.3 Billion which has grown from the $600 million two year ago. It is expected to reach$32
Billion by the year 2020. Almost 50% of people who consume e-retail are from small town while
the rest 50% is from the 8 major metros. This clearly denotes that E- Commerce is skipping the
evolution of one generation of retail in the country. The major players in the Indian e-Commerce
industry are Flipkart, Snapdeal and Amazon. The three are competing not for profit but to own
the major part of the revenue pie. Between the war of these clans, there have been major
acquisitions, mergers and pivoting. Flipkart has acquired Myntra, while Tradus and Yebhi have
pivoted their business models. Tradus is now a fresh food and grocery E-Tailer, while Yebhi is
an aggregation website for fashion products listed on other sites. FirstCry, HopScotch and
BabyOye are the leading players for baby care products in the industry. FirstCry is the leader in
the baby care products online retail segment, and has been around for 4 years now. HopScotch is
a relatively new entrant and has a flash sales model (which offers smaller scale) as opposed to
FirstCrys inventory- based model. BabyOye follows both an inventory storage model and a just-
in-time arrangement with its distribution partners. It had acquired its competitor Hoopos in late
2013. In return, BabyOye has been acquired by the Mahindra group in February 2015. It appears
that the niche baby care players have increasingly been edged out of the market by the large
horizontal players such as Flipkart, SnapDeal and Amazon. As a result, out of the half a dozen
baby care focused players that had sprung up about five years ago, only a couple of E-tailers, like
FirstCry and Hopscotch, remain in the game. E-commerce Industry: Classification Continue.....

13. E-Tail Continue.. The lifestyle categories consist of apparel, shoes, jewellery, accessories
and home dcor and accounts for a massive 45% of the entire e-retail market. With the
acquisition of Myntra, the prominent players are Jabong, Zovi and FashionAndYou. They
continue to face enormous competition from the horizontal players such as Flipkart, SnapDeal
and Amazon that are focusing on fashion more and more. Among the current verticals of Indian
ecommerce, online travel segment still holds the biggest pie with 61% market share or Rs 49,730
crore. E-tailing which involves buying and selling or consumer products online increased their
share to 29% or Rs 23642 crore. Overall, e-tailing grew 1.4 times compared to 2013. Here is a
breakdown of the e-tailing segment in 2013: Mobile and accessories: 41% or Rs 9936 crore
Apparels, Footwear and Personal items: 20% of Rs 4699 crore Consumer durables and
Kitchen durables: 14% or Rs 3404 crore Laptops, Notebooks and Tablets: 11.75% or Rs 2780
crore Home furnishing: 4.4% or Rs 1059 crore Books: 2.7% or Rs 648 crore E-commerce
Industry: Classification Continue.....

14. Travel As per the recent IAMAI report on the state of Indian ecommerce industry, it was
revealed that with 61% share or Rs.50,050 crore of the digital transactions in 2014, travel
industry is still the biggest segment. Three shifts are underway. One, with air tickets becoming a
staple, travel portals are turning their focus to hotel bookings and travel packages. "Online
penetration (of hotel bookings) is only around 7%," says a recent Nomura research report.
Presently, there are around 80 online travel start-ups in India, generating a revenue of
approximately US$ 9.7 billion and a growth of 31 per cent year on year. The January-April
2015 quarter has seen the segment receive a funding of approximately US$ 40 million (source
Venture Intelligence data). This is a significant increase when compared to US$14.8 million
invested in the online space during January-April 2014. Further, till December 2014, the segment
had received a total of US$ 115.69 million spread across 13 deals. If we go by this trend, it is
quite possible that the travel industry will continue to receive investor support in the current
fiscal as well, opines Rajat Tandon, senior director, NASSCOM 10,000 startups Program. The
biggest players in the travel category are Makemytrip.com, Yatra.com and the IRCTC website
for railway bookings. The unfettered growth of online travel category has been possible because
the regulatory and infrastructure issues do not impede its growth. Also, it does not face the
infrastructure challenges since the goods need not be transferred physically. E-commerce
Industry: Classification Continue.....

15. Classified Along with travel, e-Tailing and other sectors, classifieds market grew remarkably,
with a value of INR 896 crores (US$1.4 million) by December 2014. Competing with the major
players in the digital commerce sphere, online service market grew with a CAGR of 73% since
2010. It estimated a value of INR 2,025 crores (US$3.3 million) by December 2014. Among
online ticketing services, online commuting, online food and grocery delivery system, the food
retail sector saw a boom of 40% over the last year, and by December 2014 estimated a value of
INR 350 crores (US$55.9 million). B2B and B2C Classifieds (jobs, matrimony, car, real estate
etc.) contribute to 5%, whereas other online services such as online entertainment ticketing,
online food delivery, buying discounts/deals/vouchers etc. form 2 % of the overall market. E-
commerce Industry: Classification Continue.....

16. E-commerce Industry: Key players Flipkart is a leading e-commerce company and grab the
first position after acquire myntra in a deal of $3.1 billion. Flipkart has started as a price
comparison online portal with an initial investment of 8,000 USD and later turned into an e-
retailing giant which recently ticked the 1 billion USD in gross merchandise volume. It started
with a consignment model where goods were procured on demand and turned into inventory e-
retailer supported by registered suppliers since it provided better control on the logistics chain.
Flipkart began selling books to begin with. It soon expanded and began offering a wide variety
of goods. Innovating right from the start, Flipkart has been home to few of the striking features
of Indian e-commerce. Flipkart was the first to implement the popular Cash On Delivery
facility, which every online shopping website in India offers as an option today. Flipkart
established warehouses in Delhi, Bangalore, Mumbai and Kolkata managing a fine balance
between inventory and cost of delivering goods. Facing difficulties from the 3PLs in the form of
higher delivery cost, late deliveries and faulty products delivered resulting in return and customer
dissatisfaction, it has started its own logistics arm named e-Kart. E-Kart provides a robust back-
end support to Flipkart and ensures timely deliveries. To achieve the economies of scale, recently
e-Kart started providing back-end support to other e-retailers. It has consolidated the market and
added strengths by acquiring We Read, Mime360, Chakpak.com, Letsbuy.com and Myntra along
the way. The company employs around 13,000 employees and plans to add 10,000 to 12,000
more in next one to three years after a recent acquisition of Myntra. Flipkart is planning to enter
into grocery segment soon after amazon started its grocery pilot project in Bangalore as Kirana
now. Both amazon and Flipkart may face stiff competition from local startups like bigbasket,
zopnow, bazaarcart etc. Flipkart

17. E-commerce Industry: Key players Continue..... Amazon started practicing the market place
model by launching its site in early 2013 in India. It started registering electronics goods sellers
and ended FY 2013 offering nearly 15 million products. Amazon reported the revenue of $89
billion in 2014. Amazon India has two fulfillment centers in Mumbai and Bangalore and plans to
start five new fulfillment centres across the country. Known for its strong last-mile delivery
network, Amazon India has set up a logistics arm named Amazon Logistics and started offering
same day delivery. Amazon India

18. E-commerce Industry: Key players Continue..... BookMyShow BookMyShow is Indias

biggest online movies and events ticketing company and occupies 85 to 90 percent of the online
entertainment-ticketing market; 70 percent of its sales comes from movie tickets and the
remaining from sports, plays and live events. At present, sports accounts for almost 20 percent of
its revenues and is seen as a future growth area. BookMyShow reaches about 800 to 900 cinemas
in 200 cities and towns. About 60 percent of its transactions take place via its mobile app which,
say experts, is the most successful mobile ecommerce app in the country. Paytm Paytm is a
unique web-cum-mobile platform. It has taken a big leap towards mobile commerce, trying to
cash in on the wide mobile handset penetration, and is today Indias largest mobile commerce
company. It started by offering mobile recharge and utility bill payments, and now offers a full
marketplace to consumers on its mobile apps. It has over 20 million registered users and has in a
short span of time scaled to more than 15 million orders per month. Paytm is already a leading
firm in the electronic payment space. The long-term goal of Paytm is to be a financial services
company for Indias unbanked population (41 percent of the total). The company intends to be
the first gateway for paying bills and transferring money.

19. India first came into interaction with the online E-Commerce via the IRCTC. The
government of India experimented this online strategy to make it convenient for its public to
book the train tickets. Hence, the government came forward with the IRCTC Online Passenger
Reservation System, which for the first time encountered the online ticket booking from
anywhere at any time. This was a boon to the common man as now they dont have to wait for
long in line, no issues for wastage of time during unavailability of the trains, no burden on the
ticket bookers and many more. The advancements in the technology as the years passed on have
been also seen in the IRCTC Online system as now one can book tickets (tatkal, normal, etc.) on
one go, easy payments, can check the status of the ticket and availability of the train as well. This
is a big achievement in the history of India in the field of online E- Commerce. After the
unpredicted success of the IRCTC, the online ticket booking system was followed by the airlines
(like AirDeccan, Indian Airlines, Spicejet, etc.). Airline agency encouraged, web booking to save
the commission given to agents and thus in a way made a major population of the country to try
E-Commerce for the first time. Today, the booking system is not just limited to the transportation
rather hotel bookings, bus booking etc. are being done using the websites like Makemytrip and
Yatra. IRCTC E-commerce Industry: Key players Continue.....

20. E-commerce categories Business-to-Business (B2B) B2B activities include purchasing and
procurement, supplier management, inventory management, channel management, sales
activities, payment management, and service and support. Tradeindia.com, Indias largest B2B
portal, maintained by Infocom Network Ltd. Observed that e-commerce transaction in India
show a growth rate of 30% to 40% and will soon reach the $100 million mark. International
brands are keen to make the most of the growing Indian market and are relying on the web to
exploit the customer base. Tradeindia.com, Matexnet.com, Auctionindia.com, Indiamart.com,
Metaljunction.com are some of the leading B2B exchanges. Over the years, the scope of B2B
transactions has broadened. Moving on from sales, corporations are now using B2B
communications to promote investment, trade stocks and forge financial alliances. Originally
coined to describe electronic communication between business or enterprises. Business-to-
Business or B2B is now commonly used to describe all products and service used by enterprises.
Business-to-Business covers the entire gamut of E-Commerce that can occur between two
organisations. Transaction between industrial, manufactures, partners and retailers, or between
companies, primarily fall into this category. Wholesaler Customer Business Organisation
Website Orders Order Processing Sells

21. E-commerce categories Continue...... Business-to-Consumer (B2C) Simply put, B2C

Transactions are direct dealings between businesses and consumers. A relatively new category,
B2C started gaining momentum in the late 1990s when the internet became more accessible.
This category includes everything, from information searches and electronic shopping to
interactive games delivered online. Some share of e-commerce revenues is generated from B2C
transactions. With a huge number of travel portals, railways and airlines have played a
significant role in e-commerce transactions in India. Recently, Makemytrip.com registered a
turnover of Rs.1000 crore ($200 million). In 2007-08, travel alone constituted 50% of Rs.4800
crore ($960 million) online market. In the last few years online services like banking, bill
payment, ticketing, hotel room booking, matrimonial sites and job sites are getting increasingly
popular. With the stock exchange, too, coming online, there has been a tremendous boost in the
online market. However, B2C still has a long way to go to be on par with B2B in India. This is
mainly because B2B transactions are of much grater value than B2C. Customer Business
Organisation Website Order Processing Orders

22. Consumer-to-Consumer (C2C) C2C commerce is the oldest form of trade and has existed
long before the web. However, global connectivity has given it a different dimension. Such
transactions are yet to make a significant impact on web-based commerce. Auction sites are one
example of such business. When individuals have to sell goods, they list them on auction sites
where other can bid. This transaction involves consumer-to-consumer interface. These may or
may not involve a third-party like in the case of the auction-exchange eBay. One of the biggest
challenges that C2C faces is lack of trust. The lack of a reference point make it difficult for
buyers to feel confident about the people they are dealing with. Both buyer and seller are unsure
of the quality of goods, credibility and payments. Website Customer 1 Places advertisement
Want to sell Products Want to buy Products Receives products Receives money Customer 2 E-
commerce categories Continue......

23. E-commerce categories Continue...... In this business model, it is consumers who offer
products and services to companies. This is an emerging model in India, C2B is at an early stage.
C2B connects a large audience to a bi-directional network through the internet The accessibility
of the web and technologies like digital printing, high-performance computers and software are
leading people to take this medium seriously. Website Business Organisation Customer
Processes Order Places money for particular service Receives products Receives money
Consumer-to-Business (C2B)

24. E-commerce Industry: Growth Since the E-Commerce industry is fast rising, changes can be
seen over a year. The sector in India has grown by 34% (CAGR) since 2009 to touch 16.4 billion
USD in 20141. The sector is expected to be in the range of 22 billion USD in 2015. In Indias
USD11b Indian e-commerce market is expected to grow to ~USD20b by 2015 (37% CAGR) and
Google expects it to grow to USD70b by 2020 (30% CAGR). Growth in e-commerce will be led
by e-tailing (online shopping for physical goods), which is projected to grow from ~USD2b to
USD7b+ in three years and USD45b by 2020. Within e- tailing, fashion is set to grow the fastest.
According to the report by Goldman Sachs, the E-Commerce market will account for 2.5% of the
Indias GDP by 2030, growing 15 times and reaching US$ 300 billion. The report cited the
"hyper growth in affordable smartphones, improving infrastructure, and a propensity to transact
online," as key growth factors. E-tailing will be the fastest growing segment: As at the end of
2013, e-tailing constituted only ~16% of the Indian e- commerce industry. However, as predicted
by Google India, this will be the biggest component of Indian e-commerce in a few years. By
2020, e-tailing is projected to grow to USD45b, up from ~USD2b in 2013 and ~ USD4b in 2014.
This would then be the largest segment in the estimated USD70b e-commerce industry by then.
Within e-tailing, fashion & apparel will grow fastest: 2013 saw a steep rise in the fashion
category, where e- commerce GMV doubled from USD278m t o U SD559m. Fashion is likely to
be a key driver of growth, going forward. It contributed 28% to overall GMV of E-tailing, but is
expected to contribute 35% to incremental market, and grow to USD2.8b by CY16 (33% share
v/s 28% in CY13).

25. Currently, e-Travel comprises 70% of the total e-Commerce market. E-Tailing, which
comprises of online retail and online marketplaces, has become the fastest-growing segment in
the larger market having grown at a CAGR of around 56% over 2009-2014. The size of the e-
Tail market is pegged at 6 billion USD in 2015. Books, apparel and accessories and electronics
are the largest selling products through e-Tailing, constituting around 80% of product
distribution. The increasing use of smartphones, tablets and internet broadband and 3G has led to
developing a strong consumer base likely to increase further. This, combined with a larger
number of homegrown e-Tail companies with their innovative business models has led to a
robust e-Tail market in India rearing to expand at high speed. 0 5 10 15 20 25 30 2009 2010
2011 2012 2013 2014 2015 0.4 0.6 1 1.5 2.3 3.5 63.8 5.3 7 9.5 12.6 16.4 21.3 E-Tail E-
Commerce(including E-Tail) Source: IAMAI, CRISIL, Gartner, PwC analysis and industry
experts E-commerce Industry: Growth continue....

26. E-commerce Industry: Growth continue.... An analysis of the demographic profile of internet
users further testifies that E-Commerce will rise rapidly in India in coming years. Around 75% of
Indian internet users are in the age group of 15 to 34 years. This category shops more than the
remaining population. Peer pressure, rising aspirations with career growth, fashion and trends
encourage this segment to shop more than any other category and India, therefore, clearly enjoys
a demographic dividend that favours the growth of E-Commerce. In coming years, as internet
presence increases in rural areas, rural India will yield more E-Commerce business. 9% 16%
38% 37% 0% 5% 10% 15% 20% 25% 30% 35% 40% Other 35-44 year olds 25-34 year olds 15-
24 year olds Demographic profile of India online users (as on September 2013) Demographic
profile of India online users (as on September 2013) Source: Statista website

27. E-commerce Industry: Growth continue.... 0 50 100 150 200 250 300 350 400 2012 2013
2014 2015 E 99 130 165 21638 60 92 138 Urban Rural Geographical distribution of internet
users in India (million) Source: IAMAI-IMRB A significantly low (19%) but fast-growing
internet population of 257 million in 2014 is an indicator of the sectors huge growth potential in
India. However, in relation with its population, only 19% Indians use the internet. This indicates
the potential of internet use in India and as internet penetration increases, the potential of growth
for the E-Commerce industry will also increase. According to PWC report, The number of
mobile subscribers in India jumped from 261 million in 2007-2008 to 910 million in 2013- 2014.
Along with telephony, internet penetration is soaring in rural and urban India. Moreover, the
number of rural internet users is growing by 58% annually. Increases in the number of
smartphones and 3G subscriptions are further driving this growth. Indeed, the number of
smartphone users is expected to grow at a CAGR 91% from 2012 through 2016, jumping from
29 million to 382 million. Similarly, the number of 3G subscribers could expand at a CAGR of
84%from 23 million to 266 millionduring the same period.

28. E-commerce Industry: Apparel Online fashion is emerging as the fastest growing category in
Indias booming e-commerce market, backed by strong technology as well as marketing
dexterity. It is growing at such a fast rate that experts believe by 2020, India is expected to
generate $100 billion online retail revenue out of which $35 billion will come from fashion e-
commerce. In other words, online apparel sales are set to grow four times in the next 5 years to
contribute significantly to the burgeoning e-commerce growth. Apparels is the fastest growing
segment in India. 2013 saw a steep rise in the fashion category, where e -commerce Gross
Merchandise Volume (GMV) doubled from USD 278m to USD 559m. Fashion is likely to be a
key driver of growth, going forward. It contributed 28% to overall GMV of E-tailing, but is
expected to contribute 35% to incremental market, and grow to USD2.8b by CY16 (33% share
v/s 28% in CY13). In April 2014, Amazon India started selling apparel on its India website,
entering a fast growing and higher-margin category. This increased competition for Myntra and
Jabong, the top firms in the category. Flipkart and rival, Snapdeal, had also been trying to build
their apparel business. Flipkart eventually bought out Myntra in May 2014, a month after
Amazons entering the apparel market.

29. There is a huge potential in the market, since increasing healthcare awareness which has
made people to become more health conscious has pushed the growth of this market. Some of
the major players in the market are Healthkart, Snapdeal, Amazon and Healthgenie which are
trying to capture the market by maximizing their operation to different cities. The online
healthcare product market forms nearly 0.1% contribution in the overall healthcare market in
India, so there is a huge gap between the offline and online mode of sales which provides a huge
opportunity to the new entrants to capture a significant market share. In the medium term, the
market for online healthcare products is likely to grow, driven by tremendous growth in number
of online healthcare product providers, surge in product categories as well as rise in internet
penetration. This is anticipated to post market revenues at INR 17 billion by FY2018. According
to the research report, the online healthcare products market will grow at a considerable CAGR
rate thus exceeding INR 33 billion by 2020 due to the increasing number of product categories,
new entrants in the market and rise in tech savvy population. However, the ease of ordering
medicines and good deals offered by online vendors -with 15% to 20% discounts thrown in -is
attracting a small but growing number of customers. Medicines for chronic ailments, like
diabetes and hypertension, are the bestsellers. Tandon of 1mg.com says their app has had over
1.5 million downloads since its launch in April and has served around 30-40,000 consumers in
Delhi NCR till May. So far e-pharmacies in India have been running smoothly but in the absence
of regulation, buying pills online can be risky . One way out could be accreditation of online
pharmacies as is done in the West but till that happens, the corner chemist may be the safest bet.
E-commerce Industry: pharmacy

30. E-commerce Industry: Recent trends Smartphones are driving the E-Commerce industry:
The most important contributing factor to the rapid growth of digital commerce in India is the
increase in the use of smartphones. Mobiles and mobile accessories have taken up the maximum
share of the digital commerce market in India. e-Tailing sector had a share of 41% of the total
revenue, closely followed by Apparels, Footwear and personal items, in total, having 20% share.
Consumer durable items along with kitchen appliances were estimated at around INR 3,404
crores (US$5.6 million), and the remaining 25% was dominated by Laptops/Tablets/Netbooks
(INR 2,780 crores or US$4.6 million), Home Furnishing (INR 1,059 crores or US$1.7 million)
and Books (INR 648 crores or US$0.1 million). Using Plastic money to shop online is the setting
in. Almost 45% of online shoppers reportedly preferred a cash on delivery mode of payment over
credit cards (16%) and Debit Cards (21%). Only 10% opted for Internet Banking and a scanty
8% preferred cash cards, mobile wallets, and other such modes of payment. Classifieds and
Online Service Market gain momentum : Along with travel, e-Tailing and other sectors,
classifieds market grew remarkably, with a value of INR 896 crores (US$1.4 million) by
December 2014. Competing with the major players in the digital commerce sphere, online
service market grew with a CAGR of 73% since 2010. It estimated a value of INR 2,025 crores
(US$3.3 million) by December 2014. Among online ticketing services, online commuting, online
food and grocery delivery system, the food retail sector saw a boom of 40% over the last year,
and by December 2014 estimated a value of INR 350 crores (US$55.9 million). Online
Grocery Store: Online grocery stores are gaining popularity in India due to absolute convenience,
ease of shopping and a fast-growing market. Punexpress.com, Milestore.com, Atadaal.com have
already entered the market and are gaining popularity. They provide discounted product and free
home delivery. All of these stores are targeting the Indian housewife, who are yet to move to e-
commerce way of shopping.

31. COD rules in India: The Indian market is yet not comfortable to adopt payments through
credit or debit cards. COD accounts for up to 60 per cent of transactions, according to Internet
and Mobile Association of India and audit firm KPMG. Overdependence on cash-on-delivery
mode of payment remains worrisome as the transactions add about 3 per cent additional costs.
Also, the additional processes required for COD orders, longer payment cycle, higher instances
of returns and associated costs are hurting margins. Cash on Delivery still rules the mode of
payment used by online shoppers, as it resulted in 45% of all payments in 2014. Debit Cards
came at second position with 21% share, followed by 16% by Credit Cards; Internet Banking at
10%. Mobile wallets, which have seen a surge of activity in the last few months, resulted in 8%
of all payments. Last year we had reported that 20% of all payments are being done on mobile
devices. Hence, with 8% share of mobile wallets in the overall online payments, it means that the
niche is also growing rapidly. Reportedly, there are 300 million Internet users in India right now,
and by end of 2016, 500 million mark would be breached. 0% 10% 20% 30% 40% 50% Cash on
Delivery Debit Cards Credit Cards Internet Banking Mobile Wallet 45% 21% 16% 10% 8%
Indian E-Commerce - Mode of Payment Indian E-Commerce - Mode of Payment Source:
IMRB/IAMAI Report E-commerce Industry: Recent trends Continue....

32. Big data: More and more companies will be using the big data services to create personalized
offers, an in-depth analysis of the collected data will help them make future decisions. To gain,
retain and attain more customers, online retailers would have to leverage technology to the
fullest, and by developing strategies through analytics produced using big data will help in
making customers feel special and increase brand loyalty. With the increasing adoption and use
of smartphones, businesses are able to collect large amount of data on consumers, which can be
further utilised to do target-based marketing and advertising. Mergers and Acquisitions: Merger
and Acquisitions are the increasing trend in the Indian E-Commerce. The great examples are
Flipkart-Myntra and Ibibio-RedBus. The companies are acquiring because to maximize its
firms value. RedBus acquired by Ibibio at $100-120 million and Flipkart acquires Myntra for
$300 million. E-commerce Industry: Recent trends Continue....

33. Payment Gateway have high failure rate: This is a major challenge and results in poor
customer experience. The payment gateway vendors and banks suck at technology. Payment
gateway error rates are high (>25% of transactions fail at the gateway). RBI has made it really
hard for anyone to use virtual mediums of payments (credit/debit cards, cash transfers etc.).
Payment gateway's and banks also charge way too much commission on each transaction which
is bad for the smaller players - which eats into their margins significantly. Cash on delivery is the
preferred payment mode: In India, most of the people prefer to pay cash on delivery due to the
low credit card diffusion and low trust in online transactions. Not like electronic payments,
manual cash collection is quite perilous, expensive and laborious. Logistics & Supply Chain:
Customer want their goods delivered in perfect condition and within a specific time frame.
Regular post is not a viable option and couriers have their limitations in terms of reach. All this
add to the costs. Shipping high-value goods might need insurance, which is an additional cost.
Cyber Crime: One of the biggest fears that consumer have in e-commerce is cyber crime. Cyber
crime includes criminal act such as viruses, phishing and denial of service attacks that cause e-
commerce websites to loss revenues. E-Commerce companies suffers heavy losses due to stolen
assets, breakdown of websites and so on. Apart from the financial loss, the companies reputation
is at stake. For the customer, it is a loss at the mere push of the button and its a risk that the
people are not easily willing to take. E-commerce Industry: challenges and issues

34. Cyber crime is a serious concern around the world over. It is a law enforcement challenge for
governments. Furthermore loopholes in the current legal and regulatory framework, lack of
assurance in safeguarding the privacy of personal and business data. Lack of payment gateways
have hampered the growth of e-commerce. The information technology act was passed to make
e-commerce safe. It imposes heavy penalties on those who misuse the channel to defraud others.
Indian Customers Return Much of Their Products They Buy Online: In India, E-Commerce has
lots of first time buyers. It means, they are still not sure about what to expect from e-Commerce
websites; thus, purchasers fall prey to hard sell. Finally, when the product is delivered, they
started feeling regret and return the goods. Therefore, customers regret is the biggest problem
majorly in India. Returns are expensive for e-business companies, as reverse logistics presents
unique challenges and it becomes more difficult in cross-border e- Commerce. Features Phones
Rule The Roost: The total number of mobile users in India is very high, but various people still
use feature phones, not smart phones. Therefore, the consumer group is still unable to make e-
commerce purchase on the move while the country is still away from the scales tipping in favor
of smart-phones. With increasing number of smart-phone users, the demand of online shopping
also goes up automatically. E-commerce Industry: challenges and issues Continue....

35. E-commerce Industry: Future outlook The Ecommerce is having huge scope in the
upcoming future as the number of Indian E commerce are also increasing day by day and the
number of users are also increasing in India. This shows the changing pattern of the customers
taste and preferences. It is also going to increase the employment in the country. According to
the latest research by Forrester, a leading global research and advisory firm, the e-commerce
market in India is set to grow the fastest within the Asia-Pacific Region at a CAGR of over 57%
during 2012-16. A new report by the Boston Consulting Group says online retail in India
could be a $84-billion industry by 2016 more than 10 times its worth in 2010 and will
account for 4.5 per cent of total retail. The e-commerce platforms maximize its reach to the
potential customers and provide them with a convenient, satisfying & secure shopping
experience. The third party e wallets are now replacing the cash-on-delivery method such that
people feel safe as well as both seller and buyer is mutually satisfied

36. The Indian online industry is estimated to be a $90 billion industry by 2019. Presently,
biggest share in online revenues come from online ticketing. Online ticketing eliminates the need
for standing in queues and also touch and feel of the product is not required. The apparel
segment is expected to grow significantly over the next few years. E-commerce players will
rejoice since profit margins in apparel segment are higher as compared to other categories. As a
result, the share of e-commerce in the overall e-tailing revenues will grow even faster at a CAGR
of 40-50% and reach about $15 billion USD by 2019. E-Commerce industry in India will drive
the future growth from $13 billion to $90 billion in 2020 because of rising disposable incomes
and increasing customer awareness, increasing number of Smartphone users and Internet users,
the share of apparel category in the overall online revenues will grow exponentially. According
consultancy firm PwC and industry body ASSOCHAM: Indian e-commerce industry will
spend $950-1,900 million by 2017-2020 on infrastructure, logistics and warehousing The
industry is expected to spend an additional $500- 1,000 million during the same period on
logistics functions, leading to a cumulative spend of $950-1,900 million till 2017-2020, it added
'Evolution of e-Commerce in India', estimates that over the next three to four years, there will
be an addition of 7.5-15 million square feet of space in the form of fulfillment centers. This
indicates - addition of 6-12% to the space available in form of organized warehousing in India
and almost 25-50% of all the incremental addition of consumption driven warehousing space in
the same period. E-commerce Industry: Future outlook Continue....

37. Its a boom for small and medium enterprises (SMEs) after joining ecommerce trend as these
have started providing thousands of job opportunities. Thereby, unemployment will no more be
the biggest challenge before Indian government. Ecommerce industry can proudly cite that it is
contributing its fair share to GDP. By 2020, the e-commerce sector is anticipated to cross $ 80
billion. The sales sector will also enjoy boom due to its cost-effective trait. Online business
transactions will reap revenues up to 51 percent more. The SMEs are in commanding position to
create 1.3 million jobs every year. It would be a boost to the career- seekers who can plan their
bright future after joining this industry. Conclusion