Indian eCommerce industry highlights curated by Pritam Banerjee, IIM A and Sumoya Ghosh, TISS Mumbai.

1. Industry Report
Indian E-Commerce Industry
Pritam Banerjee, IIM A
Sumoya Ghosh, TISS Mumbai

2. The E commerce industry has grown with a
CAGR of 35% from 2009 to 2012
50000
47349
45000
40000
35142
35000
Asia Pacific region is witnessing the
fastest growing changes in the ecommerce sector with India being one
of the top contributors to the
phenomena.
26263
25000
20000
19249
15000
10000
5000
0
A number of reasons can be
attributed to this
Decrease in the price of personal
computers
Growth in the number of active
internet users
Extremely competitive Internet
Service Provider (ISP) market.
2009
Source: IAMAI, 2013
2010
2011
2012
E commerce market
Current trends display a staggering CAGR of
34.58% from 2009 to 2012, bringing up the
investment in the Industry from INR 19249
Crore (USD 3.49 billion) to INR 47,349 Crore
(USD 8.60 billion) in a matter of 3 years.
ECOMMERCE MARKET
30000

3. The B2B market is highly concentrated with
Medium enterprises having a lions share.
Growth of the Business to Business (B2B):
400
350.9
350
300
270
250
200
150
135
100
50
0
FY 2010
FY 2011
FY 2012
India B2B Market (USD Millions)
Source: Ken Research, 2013
With a 3-firm concentration
ratio of .957, the B2B market is
high concentrated
BUSINESS TO BUSINESS MARKET
 Shot up from USD 135 million to approximately
351 million from FY 2010 to 2012 (Ken Research).
Medium enterprises have the highest
contribution at 48% followed by 32% and 20% of
small and micro companies.
Micro enterprises have experienced hampered
growth due to lack of awareness among the micro
enterprises.
 However things look promising as small
enterprises have displayed the highest CAGR of
69% in the last 3 years.
This is mainly because a majority of these firms
are run by young entrepreneurs who have higher
propensity to use internet as a platform for
generating sales.
Players like indiamart.com, Tradeindia.com and
Alibaba.com have hogged a majority of the market
share

4. The E commerce industry has grown with a
CAGR of 35% from 2009 to 2012
E-Commerce industry Segments:
Mainly travel and non travel sites.
 Online travel comprises 71% of the Digital
Commerce pie.
 Main reason for the same is due to booming
urban internet savvy population.
Share of contribution
Online
Travel
6%
5% 2%
E tailing
16%
71%
Financial
Services
Classifieds
The other segments mainly ETailing,
Financial
Services, Classifieds, and other
online services constitutes much
lesser share of the digital space
B2C MARKET & SEGEMNTATION
Business to Consumer (B2C) domain growth:
 High internet penetration and increase in the
number of active users.
 Rise of the disposable income of the middle
class India has led to an increase in online
spending of the goods.
According to Internet and Mobile Association
of India (IAMAI), as many as 19.2 million people
have looked for information online,
Out of these, 73% have bought either some
goods or services from the internet.
 The number of people who shops online has
doubled in just two years and is a positive sign for
the ecommerce industry

5. The online travel market forms a major
chunk of the ecommerce industry and is
growing at a healthy rate.
40000
34544
35000
30000
26572
25000
20400
20000
15000
Top Travel Websites
Reach
10000
Indian Railways
19.2%
5000
Makemytrip.com
11,6%
Yatra Online
8.35%
Jet Airways
14953
4.6%
TripAdvisor
3.9%
Indiainforail.com
3.2%
Cleartrip.com
3.0%
Expedia
2.9%
Travor Media
2.6%
Mustseeindia.com
2.3%
Redbus.in
2.0%
0
2009
Source: IAMAI, 2013
2010
2011
2012
Onine travel segment (INR Crore)
The online travel segment has seen a CAGR of
55.5% from 2007-2012. This is due to rise of
disposable income, surge in demand for domestic
travel and the boom of the tourism industry.
Domestic travel contributed to as much as 50% of
the total market, followed by railways
tickets, international air tickets, hotel bookings
and bus tickets.
ONLINE TRAVEL MARKET
The Indian online travel market is highly fragmented.
Indian Railways, the market leader, has only 19.2% reach.
Other major players like makemytrip.com and yatra
Online has 11.6% and 8.3% respectively. The portals have
transformed from a mere ticketing website to a complete
travel guide. The online travel segment market is
expected to grow at a CAGR of 32% for the next 5 years
and will remain a dominant contributor to the total ecommerce revenue.

6. E-tailing segment is the most growing
segment in the e-commerce space.
7000
6454
6000
5000
3000
 E-tailing encompasses buying consumer items like
apparels, electronic devices, home and kitchen
appliances, jewellery, online.
Competition is intense due to low entry barrier of this
segment.
 However, Amazon.com, flipkart, snapdeal.com,
jabong.com, and myntra.com are some of the major
players.
 This segment is expected to grow further as people
become more pressed for time.
 Also the choice that e-tailing sites offer to customers
will drive demand for this segment.
 However there will be intense price based
competition in this sector and consolidations are in the
order
2372
2000
1550
1000
0
2009
2010
2011
2012
Etailing (INR Crore)
Source: IAMAI, 2013
•The E-tailing market grew at a staggering
pace of 60% in the last 3 years.
• This high growth is due to changing
customer preferences, faith in online
retail, and high convenience yield
provided by online shopping.
E-TAILING SEGMENT
E-Tailing:
3842
4000

7. There are plenty of opportunities for the
online financial services in India.
3500
2886
3000
2500
2255
2000
1848
1540
1500
1000
500
0
2009
2010
2011
2012
Financial Services (INR Crore)
Source: IAMAI, 2013
The online financial services segment is
expected to grow at the steady pace of
23% for the next 5 years.
ONLINE FINANCIAL SERVICES
The financial services segment includes
applying for insurance, paying online
bills, and premiums and online
transactions.
According to Ken research group, in
every 18 minutes an online insurance
plan is sold.
The costs of these insurance policies
are lesser with premiums being 40%-60%
cheaper.
This is a win-win situation for both the
insurance provider and the customers.
 Also the convenience provided by
online portals has led to more customers
choosing the online route for bill
payment
The growth will be fuelled by the
expanding online insurance market and
more internet penetration.

8. Classified sub segment in the B2C sphere
will have a good growth in the future
2500
2354
2000
CLASSIFEIDS SEGMENT
Classified segment has also witnessed
approximately 40% growth over the last few
years.
 Currently it is in a very nascent stage and has
lot of scope for growth.
Online advertising is lot cheaper than
conventional methods and unlike the latter; it is
not constrained to a geographic location.
Here, the growth is mainly fuelled by services
like online job (60% of the segment), online
matrimony, B2C classifieds and B2B classifieds.
Naukri.com, timesjob.com, monster.com are the
major players in the job market while
jeevansathi.com, shaadi.com are the major
matrimonial sites.
1682
1500
1085
1000
775
500
0
2009
Source: IAMAI, 2013
2010
2011
Classifieds(INR
Crore)
2012

9. The other online services although smaller
in size, is growing significantly .
1200
1110
1000
Other online Services
600
 These include sites offering online services like
buying entertainment tickets, food and grocery.
 IAMAI estimates the market size of these
services to be around INR 1,110 Crore in 2012.
 This is expected to grow by 25%.
 The market for buying entertainment, movies
and sports tickets is valued at INR 795 Crore while
online food delivery is sized at INR 250 Crore.
 Bookmyshow.com is a major player in the
segment.
518
431
400
200
0
2009
Source: IAMAI, 2013
2010
2011
Other Online Services
(INR Crore)
2012
OTHER ONLINE SERVICES
792
800

10. With rising personal Disposable income, E
commerce will get a huge boost.
Personal Disposable Income will
continue to rise
2017
FUTURE SCOPE AND GROWTH
1. According to the International
Monetary Fund (IMF), personal
disposable income has grown by
15.8% annually from 2007 to 2012
reaching to USD 1546 billion in
2012.
2. As personal disposable income
rise, it signals that the purchasing
power of the people and their
standard of living has increased.
3. As a result, demand for goods and
services are expected to rise. With
more disposable income, the
benefits of time saving offered by
e-commerce will lead to growth in
the sector.
PDI of India (USD Billions)
2016
2015
2014
2013
2012
2011
2010
2009
0
Source: IMF 2013
1000
2000
3000
4000

11. Number of active internet users are rising
which is an impetus for e-commerce
Number of active Internet users in India is poised to rise
800
684.5
700
600
505.3
500
375.3
400
314.2
300
248.6
168.6
200
100
60.1
89.3
121.5
0
2009
Source: Ken Research, 2013
2010
2011
2012
2013 (E)
2014 (E)
No of Internet Users India in Millions
2015 (E)
2016 (E)
2017 (E)
FUTURE SCOPE AND GROWTH
Internet penetration has increased by a CAGR of 30% from 2007 to 2012. There has
been an increase in internet user base and such trend is expected to continue. With
more number of unique users, the attractiveness of the sector will rise. This will led to
more advertisement on the digital media. As advertisements increase, the trial rate and
the repeat rate for online retailing is likely to increase. This will trigger growth in both
the travel and non travel segment due to more customer acquisition.

12. With more demands for plastic cards, the ecommerce industry will get a momentum.
Total No of Plastic cards on the basis
of cards outstanding (Milions)
Demand for debit and credit
cards will see a rise
FUTURE SCOPE AND GROWTH
2017
The demand for debit and credit
cards has also seen a steady rise
over the last few years. Most of
the banks now provide online
banking and debit card facility
with every new account. With the
financial inclusion drive by the
RBI, the number of bank accounts
(and hence the number of debit
cards) will definitely see a rise.
This coupled with rising disposable
income will invariably lead to
more online transactions.
2016
2015
2014
2013
2012
2011
2010
2009
0
100
Source: Ken Research, 2013
200
300
400
500
600
700
800

13. We have a very positive outlook for the E
commerce market in India
Overall the future of the ecommerce industry is indeed very bright.
"I believe we can still be a footnote in the history of e-commerce.“
-Jeff Bezos (US founder and CEO of Amazon.com)
CONCLUSION
 The ecommerce industry in India is nascent.
 With internet penetration, Personal disposable income on the rise and with gradual
demand of debit and credit cards, the ecommerce industry is all set for some good
growth numbers in the future.
 There are, however, concerns amongst customers regarding the quality of the
product/offer, lack of the “fun” factor of shopping, and, about the security of the
online payments.
 These challenges are being addressed by innovations like cash on delivery, money
back guarantee; such challenges can be easily dealt with.
 Due to lower barriers of entry, competition is likely to be quite high.
 Price based competition can lead to shrink in margins.
 However the next few years will see some consolidation in the market space and
inflow of investment in this sector is quite likely.

14. About the Authors
Pritam Banerjee
Work Experience: Consulting, Deloitte, Mumbai
Summer Internship: Equity Research, Espirito Santo Investment Bank, Mumbai
Sumoya Ghosh (Coordinator, E-cell, TISS Mumbai)
College: Tata Institute of Social Sciences, Mumbai.
Work Experience: UNICEF
Sumoya is a student of Social Entrepreneurship in TISS Mumbai. She has worked with UNICEF and is the
coordinator of the E-cell of TISS and the editor of the social entrepreneurship magazine. A meritorious student of
Jadavpur University, she has published reports on various topics including Direct Cash Transfers and is known for
her work.
TEAM PROFILE
A meritorious student from BESU, and an internationally rated Chess player, Pritam has worked for Deloitte
Consulting as a functional domain Analyst and is appreciated for his high quality deliverable. His summer
internship report on Direct Cash Transfer is widely discussed in Press and has been appreciated by Senior
management of various companies. It has also been a part of the curriculum of IIM Ahmedabad.