E-Commerce in India: Key Factors and Major Companies

By pjain      Published June 12, 2019, 7:47 p.m. in blog Invest   

E-Commerce Key Factors Overview

MKT: India’s retail market $670 b, EC growth 1200% to $200b

The market itself is undergoing a transition as shoppers rapidly shift to the internet. By 2026, India’s online retail is estimated to grow by 1,200% to $200 billion (Rs13.3 lakh crore) and comprise 12% of its overall retail trade, up from just 2% in 2016.

India EC segment is smaller than US, Europe, China

India’s e-commerce sector is currently estimated at around $33 billion by US-based research firm eMarketer which shared its numbers with Quartz. This means e-commerce will account for just 2.9% of India’s total retail market in 2018. However, by 2021, it will cross $50 billion, growing around 50% over three years.Now, consider that the world’s largest e-commerce acquisition was announced in India last month when Walmart bought a majority stake in homegrown Flipkart for a massive $16 billion. The deal value: $22 billion. The Indian e-commerce sector has several other players valued in billions of dollars. For instance, American e-tailer Amazon’s India arm is reportedly valued at $16 billion and digital payments firm Paytm’s e-commerce business, Paytm Mall, apparently has a valuation of around $2 billion. Another unicorn, Shopclues, was valued at $1.1 billion in 2017. Given all this, $33 billion doesn’t seem like a lot. Nonetheless, the players are investing heavily. Amazon is reportedly looking to splurge $2 billion, in addition to the $5 billion CEO Jeff Bezos has already committed to India. China’s Alibaba is also heavily invested, backing Paytm Mall and grocery delivery startup BigBasket. These investments are perhaps based on the hope that the ongoing spike in internet penetration will push e-commerce growth. Over 337 million Indians—a quarter of the population—are likely to use a smartphone by the end of this year. Just 25% of India’s population will shop online in 2018, but by the end of 2022, that share will grow to 42%, eMarketer estimates.

“…Flipkart, Amazon, and Paytm Mall have been competing fiercely,” said Eric Haggstrom, forecasting analyst at eMarketer. “All three are making large investments, which include improved logistics and payment systems, as well as offering deep discounts, which will fuel future growth in the market.”

EC Ads are Important to Profits : Mob Mkt Moves

April 2015 Acquires mobile marketing firm AppIterate to support its “mobile-first strategy.”

March 2015 Acquires Sequoia Capital-backed mobile advertising company AdIquity.

Logistics

EC Lockers, Last Mile Delivery

Invests in Qikpod, a then yet-to-be-launched startup that planned to offer locker service for deliveries.

EC Platforms, Tech Moves

November 2015 Takes a u-turn on its mobile-only strategy. Launches a data-light mobile website called ”Flipkart Lite.”

Mar 2015 Flipkart and Myntra shut their mobile websites in an attempt to become an app-only shopping platform.

April 2015 Says will shut its desktop website soon, too, and go app-only.

9/13 - Launches Android App - was mWeb before

4/13 Flipkart Moves to a marketplace model from an inventory-led model

Flipkart

Flipkart, which is in a never-ending discount model in fending off Amazon, is struggling as well.

Investing in Flipkart could go a long way in getting a piece of that pie

May 18 Walmart, has agreed to buy a controlling stake in the company, Softbank chief executive officer Masayoshi Son said today .The investment in Flipkart is more about Walmart wanting to invest in a rival of Amazon

Aug 17 $1.5b from Japan’s Softbank

Apr 17 Raises $1.4 billion from Chinese internet firm Tencent, American online retailer eBay, and software giant Microsoft. Also acquires eBay in exchange for equity. eBay continues to operate as an independent entity.

Dec14 Hits 11b valuation -on raise $700m then May’15 raised $500m for $15.5b valuation, July $700m at $15b

VALs\\ Mar 16 Morgan Stanley trims Flipkart’s valuation by 27%.

10/14 Launches its flagship annual sale: the Big Billion Day a la China Singles day by Alibaba

7/14 $1b from Singapore wealth fund, and $210m from Russian billionaire Yuri Milner’s fund DST Global.

7/13 Raises $200m aggressive fund- valuation hits $1.5b - Naspers, Accel Partners, Tiger Global, and Iconiq Capital

Then Oct 13 raised another $160m Dragoneer Investment Group, Morgan Stanley Investment Management, Sofina, Vulcan Capital, and Tiger Global.

2011-12 Acqs Mallers digital music, chakpak bolly news sister vc fir-backed firm, Flyte music downlad, letsbuy electronics

Later exited music downloads due to piracy and micropayments problem in India - no credit cards

Sep 2009 $1m funding from Accel partners, headcount 150

Sept 2007 10-year-old firm, started by IIT-Delhi 2005, Amzn alumni Sachin Bansal and Binny Bansal (not related) for books

Walmart - Reliance Cooperation - Blocked on FDI, Shopkeepers opposition

Walmart 2007: kirana wholesale

Its ride here has been far from smooth, given the country’s restrictive policies and a failed joint venture with local partner Bharti Enterprises presence in Asia’s third-largest economy is limited to around 20 wholesale—or business-to-business (B2B) stores—under the Best Price brand name. In a bid to expand its footprint, in 2014, Walmart said it would take these stores online.

Amazon

E-commerce veteran Amazon invested billions of dollars.

Snapdeal down - neither Growth nor a Path to Profits

Snapdeal failed to stay afloat

did and a few others did earlier,” Joshi said. Profit-making has to feature on their agenda somewhere down the line even if growth is the priority now, he added.

Backed by Chinese investors Alibaba with Foxconn Technology and Softbank

Global esp US Walmart vs Amazon

The latter has slowed down the pace of opening new stores to focus on online—offering fast and free shipping—to compete with Amazon’s Prime shipping service. Last June, Walmart said it would turn its 1.5 million employees in the US into delivery drivers by giving them the option of earning extra by delivering packages on their way home after work.

The company is also trying to establish itself in the high-margin fashion segment, also a focus area for Amazon. In November, Walmart partnered with department store Lord & Taylor to “create a premium fashion destination on Walmart.com.”

In the US, Walmart has acquired at least three e-commerce websites, Jet.com, ShoeBuy.com, and Moosejaw.com, to boost its online play. Jet.com co-founder Marc Lore now heads Walmart’s e-commerce business while ShoeBuy.com competes with Amazon’s subsidiary Zappos. In Japan, Walmart has forged an alliance with Japanese e-commerce firm Rakuten Inc.


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