Profiling Indian eCommerce 2019

(Draft) Presented by Zameel Pichen, Megham Labs Pvt Ltd

Intro :

The Indian retail industry has emerged as one of the most dynamic and fast-paced industries
due to the entry of several new players. However, indian owned companies are assumed to get
more importance as india prepares to support the eCommerce companies which is evident by
the laws passed in February 2019.

The causes eCommerce

Total consumption expenditure is expected to reach nearly US$ 3,600 billion by 2020 from US$
1,824 billion in 2017. It accounts for over 10 per cent of the country’s Gross Domestic Product
(GDP) and around 8 per cent of the employment. India is the world’s fifth-largest global
destination in the retail space.

India's retail market is expected to increase by 60 per cent to reach US$ 1.1 trillion by 2020, on
the back of factors like rising incomes and lifestyle changes by middle class and increased
digital connectivity. Online retail sales are forecasted to grow at the rate of 31 per cent year-on-
year to reach US$ 32.70 billion in 2018.

India has an internet users base of about 475 million as of July 2018, about 40% of the population.
United States (266 million, 84%), or France (54 M, 81%)
https://www.statista.com/statistics/379167/e-commerce-share-of-retail-sales-in-india/
4.8% of retail sales is through ecommerce in 2019
Indian e-commerce market to touch $84 billion in 2021: Report
The fast growing e-commerce market in the country will touch USD 84 billion
in 2021 from USD 24 billion in 2017 on account of a healthy growth in
organised retail sector

The beginning of modern Indian eCommerce

● It all started with the story of snapdeal. Snapdeal is an Indian e-commerce

company based in New Delhi, India. The company was started by Kunal Bahl
and Rohit Bansal in February 2010.
● Snapdeal was founded on 4 February 2010 as a daily deals platform, but
expanded in September 2011 to become an online marketplace.
● In 2014, Masayoshi Son, Soft Bank's maverick billionaire founder tasked Nikesh
Arora, a hotshot Google executive, who was about to join the Japanese telecom
and internet major, with closing out a prospective investment in India.
● Arora convinced Bahl to agree to take SoftBank's money by offering a slightly
better valuation.October 2014, marked the arrival of SoftBank as Snapdeal's
largest investor as it led a $627-million financing round valuing the online
marketplace at $1.2 billion and got itself a 33% stake in the company .
● In September 2014, its visionary founder Jeff Bezos famously stood on a truck
outside the company's Bengaluru headquarters along with his India chief Amit
Agarwal, waving a $2-billion cheque. From here on, the Indian e-commerce story
started to change. Snapdeal reported a 301% jump in GMV for the year ended
March 2015, according to documents put up by SoftBank during its earnings
results. Between 2014 to 2015, the Indian e-commerce market almost doubled
from $6 billion to $11.5 billion as discounting peaked. Still the No. 2 player,
Snapdeal went on to successfully raise more money on the back of its growth.
● Thus began the indian eCommerce.
● https://timesofindia.indiatimes.com/companies/what-led-to-the-softbank-snapdeal-
fallout/articleshow/58451984.cms

eCommerce User Preferences:

● cash on delivery is the most preferred payment method, accumulating 75% of the
e-retail activities

Latest eCommerce Laws in India

 ● Foreign e-commerce is subject to regulations in India; under local law, foreign
companies are to serve solely as marketplaces between vendors and their
customers, and are forbidden from holding inventory in the country.
● https://venturebeat.com/2019/01/31/amazon-and-flipkart-face-uncertainty-as-
india-readies-new-rules-for-foreign-ecommerce-companies/
●
● Under new regulations effective 1 February 2019, foreign companies will be forbi-
dden from selling any products from vendors that they control or have equity
stakes in, and it is forbidden to enter into exclusivity deals between vendors and
websites.
● http://fortune.com/2018/12/27/amazon-walmart-ecommerce-india/

● This regulation is seen as a counter to Amazon and Walmart's influence on the

market, which have given smaller traders a disadvantage in the market.
● https://www.straitstimes.com/asia/south-asia/new-e-commerce-rules-in-india-
may-hit-amazon-and-flipkart

List of Companies:
● Amazon, Flipkart, ShopClues, Paytm, Snapdeal and e-bay (largest 2017)
● Flipkart, HomeShop18, Snapdeal, Indiatimes shopping and Makemytrip - Great
Online Shopping Festival
● Dhingana, IndiaPlaza.in, eBay-India, Rock.in, Seventy MM amongst others had
to close down[16] or change their business models to survive

Side Stories:
● Alibaba's lead investment in India, Paytm.
● Tiger Global-backed Flipkart
● Alibaba's arch rival, China's Tencent

eCommerce Company Profiles:

Flipkart -
Flipkart Website: flipkart.com
Flipkart Launch Year: 2007
Parent Company: Walmart
Flipkart Founders: Sachin Bansal and Binny Bansal
Flipkart Headquarters: Bengaluru, India
Key Subsidiaries: Myntra, Jabong, PhonePe, Ekart, Jeeves
Number of products available on Flipkart: 80 million products
Number of Flipkart sellers: 100,000
Number of product categories on Flipkart: 80 categories
Number of Flipkart employees:30,000 Flipkart employees
https://expandedramblings.com/index.php/flipkart-statistics/

Paytm -
Paytm website: paytm.com
Year that Paytm launched: 2010
Paytm headquarters: Noida, Uttar Pradesh, India
Paytm creator: Vijay Shekhar Sharma
Number of active Paytm users: 80 million
Total number of Paytm merchants: over 7 million
Average monthly orders made using Paytm: 60 million
https://expandedramblings.com/index.php/paytm-statistics-facts/

Freecharge facts -

Merchants: 1 million plus

Customers: 20 million
Founded in: 2010
Founders: Kunal Shah and Sandeep Tandon
Sold to Snapdeal in 2015
Deal value: $400 million
Present CEO: Jason Kothari
Investors: Tandon Group, Sequoia Capital, Sofina and Ru-Net, Tybourne Capital
Management, SF-based fund Valiant Capital Management

Snapdeal -

● Jasper InfoTech is parent company of Snapdeal

● Snapdeal had begun talking down GMV . Instead, it wanted to draw up a path to
profitability -Bahl had been quoted as saying this publicly. - 2016
● “I know Snapdeal has started focusing on profitable GMV instead of just GMV" -
Nikesh Arora,
● Head Quarters : New Delhi
● Reserve : INR 1,000 crores
● Monthly Churn : only INR 10 crore (2019)
● Indian law support.
 ● Focuses on profitable GMV (Gross Merchandise Volume)
● https://timesofindia.indiatimes.com/companies/what-led-to-the-softbank-snapdeal-
fallout/articleshow/58451984.cms

Axis Bank -
Axis Bank integrates has its own mobile wallet running by the name 'Lime' as well.

Amazon in -
● Amazon acquired Junglee in 1998, and the website Junglee.com was launched in India in
February 2012
● In September 2014, its visionary founder Jeff Bezos famously stood on a truck outside the
company's Bengaluru headquarters along with his India chief Amit Agarwal, waving a $2-
billion cheque.
● https://en.wikipedia.org/wiki/Amazon_(company)
● Amazon India sees losses widening to Rs 4,830 crore in FY17

e-bay -
ShopClues -
HomeShop18 -
Indiatimes Shopping -
Makemytrip -

Closed Companies :

Dhingana -
IndiaPlaza.in
eBay-India
Rock.in
Seventy MM

Trivia :

● 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
● (Thai Pongal is the Harvest Thanksgiving Festival[51] celebrated primarily in
India, Sri Lanka, and Malaysia.)

● 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.
 ● Niche online merchandising brands like Headbanger's Merch, Redwolf and No
Nasties partner with and even help sustain independent musicians.

● New Delhi: South Korean lifestyle brand Mumuso is aiming at a business

turnover of Rs 1,000 crore with over 300 outlets in India by mid-2022, a top
company official said. The company, which had entered the Indian market in
September, 2018 with its stores in Kolkata and Mumbai, plans to expand to other
metro and tier II cities as it is banking on range of affordable products.
● Besides, the company plans to go online to tap into the rapid growing e-
commerce business in the country.

Mergers and Acquisition:

May 2014 Acquisition Flipkart acquires Myntra US$300 million

April 2015 Acquisition Snapdeal acquires FreeCharge US$400 million
June 2016 Acquisition Myntra acquires Jabong US$70 million
July 2017 Acquisition Axis Bank acquires FreeCharge US$60 million
April 2016 Acquisition Flipkart acquires PhonePe Undisclosed
May 2018 Acquisition Infibeam buys Unicommerce ₹120 crore (US$17 million)
May 2018 Acquisition Walmart acquires Flipkart US$16 billion

Valuation Economics:

● The investors, like in other private internet companies, had invested by acquiring
preference shares of Snapdeal. And preference shareholders are entitled to get
their capital back first, with a certain return in case of a liquidity event, which is
typically a public offering or an acquisition.
● Preference shares give investors protection when they are investing in high
valued companies which haven’t shown significant revenues or started
generating profits.
●
eCommerce Market State Profile
Some Infographics :
Market Size

● The growing purchasing power and rising influence of the social media have
enabled Indian consumers to splurge on good things. Import of electronic goods
reached US$ 53 billion in FY18.
● Indian appliance and consumer electronics (ACE) market reached Rs 2.05 trillion
(US$ 31.48 billion) in 2017. India is one of the largest growing electronics market
in the world. Indian electronics market is expected to grow at 41 per cent CAGR
between 2017-20 to reach US$ 400 billion.
● As of FY18, washing machine, refrigerator and air conditioner market in India
were estimated around Rs 7,000 crore (US$ 1.09 billion), Rs 19,500 crore (US$
3.03 billion) and Rs 20,000 crore (US$ 3.1 billion), respectively.
● India’s smartphone market in 2018 grew by 14.5 per cent with a shipment of
142.3 million units. India is expected to have 829 million smartphone users by
2022.
● Consumer durables index under the Index of Industrial Production (IIP) has
grown 7.5 per cent year-on-year between Apr-Dec 2018.
Upcoming Government Initiatives
The Government of India has taken various initiatives to improve the retail industry in
India. Some of them are listed below:

● The Government of India may change the Foreign Direct Investment (FDI) rules
in food processing, in a bid to permit e-commerce companies and foreign
retailers to sell Made in India consumer products.
● Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in
online retail of goods and services through the automatic route, thereby providing
clarity on the existing businesses of e-commerce companies operating in India.

Road Ahead
● E-commerce is expanding steadily in the country. Customers have the ever
increasing choice of products at the lowest rates. E-commerce is probably
creating the biggest revolution in the retail industry, and this trend would continue
in the years to come. India's e-commerce industry is forecasted to reach US$ 53
billion by 2018. Retailers should leverage the digital retail channels (e-
commerce), which would enable them to spend less money on real estate while
reaching out to more customers in tier-2 and tier-3 cities.
● It is projected that by 2021 traditional retail will hold a major share of 75 per cent,
organised retail share will reach 18 per cent and e-commerce retail share will
reach 7 per cent of the total retail market.
● Nevertheless, the long-term outlook for the industry is positive, supported by
rising incomes, favourable demographics, entry of foreign players, and increasing
urbanisation.

● Exchange Rate Used: INR 1 = US$ 0.0139 as on Q3 FY19.

● References: Media Reports, Press Releases, Deloitte report, Department of
Industrial Policy and Promotion website, Union Budget 2017–18, Consumer
Leads report by FICCI and Deloitte - October 2018