India e-commerce

Accel Partners
2014

Contents

S.No.

Content

Slide Number

1.

Summary

3-9

2.

Current Market Information

10 - 18

3.

Trends

19 - 21

4.

Growth Factors

22 - 25

5.

Payments

26 - 27

6.

BRICs comparison

28 - 31

Contents

S.No.

Content

Slide Number

1.

Summary

3-9

2.

Current Market Information

10 - 18

3.

Trends

19 - 21

4.

Growth Factors

22 - 25

5.

Payments

26 - 27

6.

BRICs comparison

28 - 31

KEY FINDING

Executive summary
Key finding

Online shopping of physical goods in India, will grow to $8.5Bn in 2016.

Number of online shoppers in India will more than double to 40M.
Indian online shoppers will double

$8.5Bn

40M

2016P

25% CAGR
20M

$2Bn

63% CAGR

2013

CY2013

CY2016P
Accel estimates and Industry sources

2x Indian shoppers X 1.1x number of orders per year per shopper X 2x average order value
Online Shopping defined in this presentation does not include travel, ticketing and food ordering only physical goods commerce
4

KEY FINDING

Executive summary
Key findings

Increasing average order value

INR 3,600

1. Last year there was a significant jump in average

order value as there was a penetration of new
categories like jewellery, home dcor etc.
2. Also, users are becoming more comfortable
buying higher priced items online.

INR 1,860
INR 1,080

25%
CAGR

67%

CY2012

CY2013

CY2016P

Fashion + Footwear + Accessories GMV

$2,811 M
71%
CAGR

100%
Growth

$278 M
CY2012

$559 M

CY2013

Average order values climbing up rapidly

CY2016P

Fashion category doubled last year

1. Last year was the rise of the fashion category
fashion e-commerce GMV doubled since 2012.
2. Given the young demographic which is shopping
for latest looks online and increasing choice
online we estimate that this category will see
400% growth in the next 3 years and rival
electronics and mobile category in GMV.
Accel estimates and Industry sources
5

TRENDS

Executive summary
Trends

Mobile shopping is seeing phenomenal growth

27x
1x

8x

2012

2013

2016P

24x
4x

1. Mobile shopping infrastructure is improving

smartphones, connectivity, mobile websites
and apps
2. People are becoming more comfortable in
ordering higher priced items online
Women influenced sales will grow 5x
in next 3 years
1. 35% of online GMV in 2016 will be influenced by
women

1x

2. Key factor in this growth is increasing supply of

women specific categories e.g. jewellery, lingerie,
motherhood products

2012

2013

2016P

Accel estimates and Industry sources

Online Shopping defined in this presentation does not include travel, ticketing and food ordering

TRENDS

Executive Summary

Trends: Rise of EMIs &Wallets

With increasing order values, we are seeing an uptick of EMI payments

3rd party wallets albeit a new phenomenon, have a strong value proposition and
will be quick to become popular similar to China
Indian payment landscape - rise of EMIs and Wallets
(Total: 100%)
2013

2016P

60%
50%

16%

12%

12%

15%

12% 11%
1%

COD

Credit Cards

Debit Cards

Net banking

5%

EMI

7%
0%
3rd party wallets

Accel estimates, Accel portfolio companies and Industry sources: PayU, EMVantage
7

GROWTH FACTORS

Executive summary
Growth factors

More penetration in Tier-II and Tier-III towns

1. Tier 2 cities growing much faster in eCommerce

adoption than Tier 1
2. Some states completely lagging in ecommerce,
waiting for infrastructure to be put in place

New shoppers will come from the 40M+ Gen-Y FB users

20M

Gen-X
shoppers

20M

Gen-Y
shoppers

1. Potentially 40M shoppers between ages of 19

24 years, will start spending money online
2. These shoppers also have a propensity to
spend more money than Gen-X shoppers
Accel estimates, Google, Facebook, NSSO, Accel portfolio companies

Online Shopping defined in this presentation does not include travel, ticketing and food ordering

GROWTH FACTORS

Enough headroom for growth

Online retail is still a very small portion of retail in India

247Mn mobiles shipments in India CY2013

USD 45Bn jewellery sales in India CY 2013

Offline sales,
$44.92 Bn,
99.8%

Offline sales,
243 Mn, 98%

Online sales,
4 Mn, 2%

600Mn books sold in India CY 2013

Online sales,
$0.08 Bn, 0.2%

USD 43Bn fashion + footwear sales in India CY 2013

Offline sales,
$42 Bn, 99%

Offline sales,
555 Mn,
93%

Online sales,
45 Mn, 7%
Accel estimates, Accel portfolio companies and industry sources: CMR, FICCI, Deloitte

Online sales,
$0.5 Bn, 1%
9

Contents

S.No.

Content

Slide Number

1.

Summary

3-9

2.

Current Market Information

10 - 18

3.

Trends

19 - 21

4.

Growth Factors

22 - 25

5.

Payments

26 - 27

6.

BRICs comparison

28 - 31

10

Market

Trends

Growth Factors

Payments

BRICS

Growth of India online shopping

Internet users in India
400 M
140 M
CY2012

213 M
CY2013

CY2016P

Annualized online shopping GMV

# of orders per month

12M

% of internet users who visit ecommerce sites = 60%

5M

4M

Conversion from visitors to buyers

3.00%

CY2012

CY2013

CY2016P

2.90%
2.70%

CY2012

CY2013

$1,983 M

Average order value

$816 M

CY2016P
$60

Orders per buyer per month

1.70

1.50
CY2012

$8,519 M

CY2013

CY2013

CY2016P

$31
$18
CY2012

1.55

CY2012

CY2013

CY2016P

CY2016P

Accel estimates, Accel portfolio companies, comScore & IAMAI

11

Market

Trends

Growth Factors

Payments

BRICS

Growth of India online shopping

Internet users in India
400 M
140 M
CY2012

213 M
CY2013

CY2016P

Accel estimates, Accel portfolio companies, comScore & IAMAI

12

Market

Trends

Growth Factors

Payments

BRICS

Growth of India online shopping

Internet users in India
400 M
140 M
CY2012

213 M
CY2013

CY2016P

% of internet users who visit ecommerce sites = 60%

Conversion from visitors to buyers

3.00%

2.90%
2.70%

CY2012

CY2013

CY2016P

India e-commerce market will start maturing

and display characteristics similar to China
which traditionally has higher conversion rates
(nearly 3.5%)
This is due to e-commerce being only choice for
availability of goods in parts of the country and
easy payment options like COD which are not
problems in western countries

Accel estimates, Accel portfolio companies, comScore & IAMAI

13

Market

Trends

Growth Factors

Payments

BRICS

Growth of India online shopping

Internet users in India
400 M
140 M
CY2012

213 M
CY2013

# of orders per month

CY2016P

12M

% of internet users who visit ecommerce sites = 60%

4M

Conversion from visitors to buyers

3.00%

CY2013

CY2013

CY2016P

India e-commerce market will start maturing

and display characteristics similar to China
which traditionally has higher conversion rates
(nearly 3.5%)
This is due to e-commerce being only choice for
availability of goods in parts of the country and
easy payment options like COD which are not
problems in western countries

2.90%
2.70%

CY2012

CY2012

5M

CY2016P

Orders per buyer per month

1.70

1.50
CY2012

1.55
CY2013

As e-commerce sites gain trust, users are

beginning to order more frequently
Also, repeat users acquired more than 1yr old
- are more comfortable ordering online and
order significantly more than first time buyers

CY2016P

Accel estimates, Accel portfolio companies, comScore & IAMAI

14

Market

Trends

Growth Factors

Payments

BRICS

Growth of India online shopping

Internet users in India
400 M
140 M
CY2012

213 M
CY2013

CY2016P

# of orders per month

12M

% of internet users who visit ecommerce sites = 60%

5M

4M

Conversion from visitors to buyers

3.00%

CY2012

CY2016P

2.90%
2.70%

CY2012

CY2013

CY2013

Average order value

CY2016P
$60

Orders per buyer per month

1.70

1.50
CY2012

$18
CY2012

1.55
CY2013

$31

CY2013

Last year there was a significant jump in

average order value as there was a
penetration of new categories like jewellery,
home dcor etc
Also, users are becoming more comfortable
buying higher priced items online

CY2016P

CY2016P

Accel estimates, Accel portfolio companies, comScore & IAMAI

15

Market

Trends

Growth Factors

Payments

BRICS

Growth of India online shopping

Internet users in India
400 M
140 M
CY2012

213 M
CY2013

CY2016P

Annualized online shopping GMV

# of orders per month

12M

% of internet users who visit ecommerce sites = 60%

5M

4M

Conversion from visitors to buyers

3.00%

CY2012

CY2013

CY2016P

2.90%
2.70%

CY2012

CY2013

$1,983 M

Average order value

$816 M

CY2016P
$60

Orders per buyer per month

1.70

1.50
CY2012

$8,519 M

$18
CY2012

1.55
CY2013

$31

CY2013

CY2016P

CY2012

CY2013

CY2016P

Last year there was a significant jump in

average order value as there was a
penetration of new categories like jewellery,
home dcor etc
Also, users are becoming more comfortable
buying higher priced items online

CY2016P

Accel estimates, Accel portfolio companies, comScore & IAMAI

16

Market

Trends

Growth Factors

Payments

BRICS

Other observations
# of online shoppers in India
40M

20M
13M
CY2012

CY2013

1. ~200M of Indians will come online in next 3 years

2. Majority of these will come online on
smartphones
3. E-Commerce companies are building their
brands, thus gaining trust of users

CY2016P

# of orders per customer / year

3.55
3.4

3.2

CY2012

CY2013

1. Existing shoppers shop more number of times

than new shoppers (in that year)
2. As Indias e-commerce market grows the
proportion of existing shoppers will increase from
30% (in 2013) to 50% (in 2016)

CY2016P

Accel estimates & Accel portfolio companies

17

Market

Trends

Growth Factors

Payments

BRICS

E-commerce is a small sliver of Indian retail

Unorganized retail

Organized retail - offline

Organized retail - online

91.0%

92.0%

8.7%

7.8%

0.3%

0.2%

2012
Accel estimates & Deloitte

2013
18

Contents

S.No.

Content

Slide Number

1.

Summary

3-9

2.

Current Market Information

10 - 18

3.

Trends

19 - 21

4.

Growth Factors

22 - 25

5.

Payments

26 - 27

6.

BRICs comparison

28 - 31

19

Market

Trends

Growth Factors

Payments

BRICS

Mobile

There is a traffic to revenue gap on mobile e-commerce in India

Mobile shopping grew 800% in 2013, we
expect it to grow at a 150% CAGR till 2016

Factors leading to major adoption of mobile as a channel:

70% of the growth in Indian internet users was mobile only

Showrooming a growing habit

Reasons why there is not a 1:1 conversion of traffic to mobile:

1x

8x

27x

2012

2013

2016

Mobile revenue share is lagging mobile

traffic share in India and China
Mobile Traffic %

33% 33%

Most e-retailers do not have mobile optimized sites

Most transactions are for low ticket items
Mobile marketing budgets are < 10% of overall digital marketing
budgets, even though they have increased 100% Y-o-Y, even
though overall ad spends have increased 20% Y-o-Y
India vs rest of BRICS - mobile shopping GMV as % of
overall GMV
9.8%

9%

27%

23%

4%
9%
India

10%
China

N/A
Japan

India

Accel estimates, Accel portfolio companies, CNNIC and other industry sources

Brazil

Russia

China
20

Market

Trends

Growth Factors

Payments

BRICS

Women shoppers a growing force

Women influenced GMV
$3Bn / 24x

15% of
market

26% of
market

35% of
market

$511 M / 4x

1. Working women segment grew 43% in 2013 and

constitutes nearly 10% of Active internet users in
India according to i-Cube & IAMAI
2. Categories like baby care, home dcor, jewellery
etc have traditionally been influenced by women
decision makers. As more choice become
available more women are shopping online.

$122 M / 1x
2012

2013

Women spend 40% more

time on fashion sites

2016P
Women spend 60% more time
on jewellery sites than men

Women spend upto 30% more time on

luxury sites than on home furnishing
1.3x

Male

Female

Male

Accel estimates, Accel portfolio companies & comScore

Female

Luxury/Jewellery

1.1x

Apparel

1.0x

Home furnishings

21

Contents

S.No.

Content

Slide Number

1.

Summary

3-9

2.

Current Market Information

10 - 18

3.

Trends

19 - 21

4.

Growth Factors

22 - 25

5.

Payments

26 - 27

6.

BRICs comparison

28 - 31

22

Market

Trends

Growth Factors

Payments

BRICS

Young India will become dominant presence in e-Commerce

Young Indians (19-24yrs) are more comfortable with online services e.g. FB and thus could
potentially add upto 40M new shoppers in next 3 years if we just take the Facebook users

20M new shoppers could come just from the 19-24 age group
India population

FB users (2013)

FB users %

160M
140M

149M
132M

120M

132M

100M

102M

80M
60M
40M
20M
0M

30%
13%

40M

20M

19M

13 - 18

Accel estimates, NSSO, Facebook

15%

19 - 24

25 - 30

8%
8M

31 - 36

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
23

Market

Trends

Growth Factors

Payments

BRICS

E-commerce friendly states

Central & North-Eastern India appears to have low adoption of e-commerce

Accel estimates, Accel portfolio companies, Google

Top 3 e-commerce states

Delhi-NCR
Karnataka
Maharashtra

Large states with very little ecommerce

presence:
Bihar
Uttrakhand
Chhatisgarh

Top 10 cities:
1. Delhi
2. Bangalore
3. Mumbai
4. Pune
5. Hyderabad
6. Chennai
7. Kolkata
8. Ahmedabad
9. Jaipur
10. Panaji
24

Market

Trends

Growth Factors

Payments

BRICS

Categories
Books category contributed to 21% of
the transactions

but only 7% of the GMV

Categories by GMV (%)

Categories by # of trxns. (%)

Home dcor
3%
Jewellery
2%

Others
4%
Jewellery
1%

Home
dcor
8%

Books
21%

Mobile,
Tablets &
Accessories
9%

Fashion,
Footwear &
Accessories
35%

Babycare
8%

Computers,
Cameras,
Electronics &
Appliances
Health &
10%
Personal care
4%

Accel estimates & Accel portfolio companies

Others
2%
Books
7%

Fashion, Footwear
& Accessories
28%

Babycare
3%
Health &
Personal care
2%

Mobile, Tablets &

Accessories
35%

Computers,
Cameras,
Electronics &
Appliances
18%

Contents

S.No.

Content

Slide Number

1.

Summary

3-9

2.

Current Market Information

10 - 18

3.

Trends

19 - 21

4.

Growth Factors

22 - 25

5.

Payments

26 - 27

6.

BRICs comparison

28 - 31

26

Market

Trends

Growth Factors

Payments

BRICS

Payments
With most e-commerce players launching their wallets, we believe that 3rd
party wallets will become a significant alternative to COD in coming years.
2016P

2013

Debit
Cards
11%

Net
banking
12%

EMI
1%

Net banking
11%

COD
60%
Credit
Cards
16%

Accel estimates & Accel portfolio companies

EMI
5%

Debit Cards
15%

3rd party
wallets
7%

COD
50%

Credit Cards
12%

27

Contents

S.No.

Content

Slide Number

1.

Summary

3-9

2.

Current Market Information

10 - 18

3.

Trends

19 - 21

4.

Growth Factors

22 - 25

5.

Payments

26 - 27

6.

BRICs comparison

28 - 31

28

Market

Trends

Growth Factors

Payments

BRICs

Indian online shopping has tremendous growth potential

Significant headroom for growth
Only 17% of Indians are online, compared to >40% for other countries
Population

In Millions

1,500

Online population

Internet penetration %

50%

1,249

1,358

46%

60%

44%

50%
40%

1,000
591

17%

500

213

20%

200

India

30%

99

144

Brazil

10%

66

Russia

China

0%

only 9% of online Indians shop, compared to >30% in other countries

Online population

Online shoppers

Online shopper penetration %

700

in Millions

600

80%

500

200
100
-

47%

45%

400
300

100%

591

31%

213
9%

19

India

Accel estimates & Industry sources

99

31
Brazil

66
Russia

280

60%
40%
20%

30
China

0%

29

Market

Trends

Growth Factors

Payments

BRICs

BRICs B2C online shopping market

India is quite small compared to rest of BRIC countries

Indian e-Commerce market is $1.8Bn, 60x smaller than the Chinese market
$ 106 Bn / 60x

$ 1.8 Bn / 1x
India

$ 13 Bn / 7x

$ 16 Bn / 9x

Brazil

Russia

China

annual spend by an Indian online shopper is $93 - 4x smaller than Chinese one
$ 533
$ 421

$ 380

$ 93

India
Accel estimates & Industry sources

Brazil

Russia

China
30

Market

Trends

Growth Factors

Payments

BRICs

Indian e-commerce needs better infrastructure to grow

88% of the growth in India online shopping will come from more Indians online

Online shopper penetration

100%
90%
80%

Willing shoppers but

infrastructure problems

70%

Happy shoppers

China

60%
50%

Russia

40%
30%

10%
0%

Brazil

Infrastructure issues

20%

Shopping issues

India
0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Internet Penetration
(size of bubble indicates market size)
Accel estimates & Industry sources

31

CONTACT

Prashanth Prakash
Partner, Accel Partners

Subrata Mitra
Partner, Accel Partners

Prayank Swaroop
Senior Associate, Accel Partners
prayank@accel.com
32

Disclaimer
The information and opinions in this Report have been prepared or complied by ACCEL
PARTNERS and are subject to change/modification without any notice. The information
contained in this Report is believed to be accurate at the time of date of issue of this
Report, but no representation or warranty is given (express or implied) as to its accuracy,
completeness or correctness. ACCEL PARTNERS accepts no liability whatsoever for any
direct, indirect or consequential loss or damage arising in any way from any use of or
reliance placed on this material for any purpose. The contents of this Report are the
copyright of ACCEL PARTNERS. Nothing on this Report constitutes advice, nor creates
any contractual relationship.

33