Ecommerce market in India

LEAD FEATURE E-Commerce
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D ot Inut E-commerce is growing at 35-40 per cent CAGR.
Consumption trends across the country indicate
it could be poised for a boom, but not without its

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concomitant bust and consolidation story. What

o
are the synergies expected especially following
the explicit policy declaration barring FDI in

D
e-commerce? Bhavya Misra explores

66 SHOES & ACCESSORIES / october 2012

Anwendung auf dunklem Untergrund Anwendung auf weißem bzw. sehr hellem Untergrun

▶▶ A pair of footwear sells every 33 minutes The aforementioned pointers indicate the reach and
▶▶ A piece of jewellery sells every 3 minutes increasing popularity of e-commerce. But, this is only
▶▶ A watch sells every 7 minutes the tip of the iceberg. E-tailing in the country is poised
▶▶ Ebay India has over 3 million registered for a boom, but not without its concomitant bust and
users from 3,311 cities covering all 28 states consolidation story. There is a big question mark on
and 7 Union Territories whether e-commerce sites are actually making money.
Ebay The pitch actually turned queer following the government
▶▶ Top 5 non-metro cities which generate notification that “retail trading, in any form, by means of
maximum orders are Shillong, Jaipur, e-commerce, would not be permissible, for companies with
Chandigarh, Hyderabad, Cochin FDI, engaged in the activity of singlebrand or multibrand
Yebhi retail trading,” However attempts to elicit response from
▶▶ 10,000+ SKUs of shoes on the website the players quoted hereafter remained futile.
▶▶ 200+ footwear brands A recent report by Forrester Research, ‘Trends in
▶▶ 100+ accessory brands India’s eCommerce’ states, “E-commerce revenues in
Jabong India will increase by more than five times by 2016,
▶▶ Footwear is the largest and most popular jumping from US$1.6 billion in 2012 to US$8.8 billion
category followed by clothing and in 2016. While US$8.8 billion is still less than other
accessories countries in Asia-Pacific, such as China and Japan, India’s
▶▶ Sells the maximum number of footwear CAGR is much higher than any other country that we
online every single day to over 480 cities. forecast in the region.”
▶▶ Retails over 500 footwear and accessory “India is one of the fastest growing internet markets
brands in the world and is currently at 120 million. It is expected
▶▶ Top non-metro cities (apart from to touch 300 million by 2015. The online retail market
Bangalore) which generate maximum stands at around `3,000 crore and is growing at an annual
orders are Hyderabad, Pune, Ernakulum, rate of 35 per cent. According to Assocham, the market
Jaipur, Ahmedabad, Guwahati and size of online retail in India is likely to touch `7,000
Chandigarh crore by 2015 owing to increasing internet penetration,”
Myntra says Ashutosh Lawania, Co-Founder & Head-Sales and
▶▶ 25-35 pairs of footwear sold per day Marketing at Myntra.com, which was incepted in 2007.
▶▶ Top 10 non-metro cities (including “Considering the participation of small towns in the
Bangalore) which generate maximum big consumption story of India, increasing urge to find
orders are Hyderabad, Pune, Ernakulam, better value for money products and lack of infrastructure
Jaipur, Ahmedabad, Guwahati and and financial support to mainstream retail channel
Chandigarh (offline), I anticipate a growth of around five times from
▶▶ Top five most selling categories in non- 2012 to 2016 in e-commerce space which would mean
metros are jewellery, tops, shoes, dresses, a projected revenue of more than $8bn with a CAGR of
belts 57 per cent. Online apparel contribution is anticipated at
Shopnineteen 30 per cent to this figure which would mean somewhere
▶▶ Receive orders from more than 580 cities close to US$2.5bn,” Gobind Singh Pahwa, Founder and
across the country. Chairman of Shopnineteen.com states. Shopnineteen.
Yepme com was founded in March this year.

Ebay
Top 10 brands that receive max traffic on eBay: Bata, Reebok,
Puma, Fastrack, Ray Ban
Brands most searched on eBay: Ray Ban, Reebok, Puma, Fastrack
Most selling footwear brands: Reebok, Bata, Puma
Total nos of footwear & accessory listings: More than 38,000
listings in shoes & accessories live on eBay India presently. A piece of
footwear sells every 33 minutes.
Total manpower: 100 | Customer service & business development
teams: Outsourced
Technology & supply chain partners: Inhouse team of global
technology experts

Stop Press: Government Notification
• Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of singlebrand retail trading.
• Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of multibrand retail trading. october 2012 / SHOES & ACCESSORIES 67


Bagskart

Shopnineteen

“E-commerce is one of the hottest and fastest
growing industries in the country today and has
generated a lot of attention. Almost 15-20 new
e-commerce firms are setting up shop every alternate
month. Having said that, we expect consolidation
in the market in the next 10-12 months as most
of them will not make it big. Investors are closely
tracking this industry and will be keen to partner
with companies that have a strong business model in
place,” Lawania says.
Manmohan Aggarwal, CEO of Bigshoebazaar.com
and Yebhi.com states, “The e-commerce space in India
Pics: Shopnineteen

will see consolidation with emergence of few giants
and several niche portals catering to specific needs
and consumer base. India will remain attractive from
an investment point of view as the consumer market is
huge and is nowhere close to saturation point.”
Jain from Jabong states, “A number of players have
entered the Indian e-commerce space even though
it is a volatile market as consumer preferences are
changing on an everyday basis. The right approach
will be to sustain consumer interest in order to
maintain the investment attractiveness of this
market. Being a new entrant we have witnessed
tremendous growth in a very short span of time. In
a highly competitive market like this, being selective
Mukul Jain, managing director of Jabong.com e-commerce in India — more than recent estimates of on the medium that you choose and adopting
corroborates Lawania: “The e-commerce space eCommerce investment in Russia in 2011, for example.” innovative and creative strategies is the key.”
in India is at a very nascent stage currently. With “From a revenue perspective, India is on par
internet population expected to grow from current with other early stage e-commerce markets such Growth story
100-120 million to 300-400 million users in next 4-5 as Mexico, while substantially smaller than more Having said that, how many of these players
years, and with increasing share on online shoppers mature online retail markets such as Brazil and are actually looking at a prospective organic or
within this population, e-commerce is expected to China,” the report adds. inorganic growth?
grow exponentially.” “From the point of view of investments, I believe, Lawania states, “Myntra has received three
the honeymoon phase is over. Investors are no more rounds of funding so far totaling upto $40 million
Investments, mergers & investing in every second venture and laying a strong from Tiger Global, Accel Partners, Indo US and
acquisitions emphasis on a sustaining business model with IDG. While it is too soon to comment on the M&A
According to the Forrester research report, “In adorable passion to make it successful,” says Pahwa scenario in e-commerce, we are open to inorganic
2011, venture capitalists invested US$177 million in of Shopnineteen.com. growth opportunities.”



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Amrinder Dhaliwal, CEO, Donebynone states, Gulf. There is always consolidation in spaces where the company and not for a particular brand.”
“M&A is a strategic and business decision driven there is non linear fast growth and this industry is Chaitanya Aggarwal, Founder & CEO, Juvalia
by the need to grow inorganically and to provide a rapidly growing and changing. We haven’t given & You, a recently launched portal for fashion
reasonable upside/exit to investors. We do not see acquisition or stake sale a thought as of now.” jewellery under the Smile Group, says, “We have
a wave of such deals, but there certainly would be Peyush Bansal, Founder & CEO, Valyoo been incubated by Springstar and have received
opportunity buys and exits.” Technologies the owner of Bagskart.com, Lenskart. a comprehensive seed round of funding. The
“We have a long-term vision for our brand and would com, Jewelkart.com and Watchkart.com states, opportunity for us to acquire a brand is limited in
continue to invest in its growth,” he further informs. “Valyoo is backed by IDG Ventures, a US$150 this category as there are really no national level
Ishita Swaroop, CEO & Co-founder of 99Labels. million technology venture capital fund in India that players. If that was the case, we would definitely
com says, “We have received a funding of $3.5 is behind companies like Myntra.com, Ozone Media be interested.”
million from Info Edge in the past. Info Edge owns and others. We have got initial funding from IDG Aggarwal of Yebhi.com, which recently acquired
and manages some of the best known brands on the Ventures and have raised US$4 million to work on Stylishyou.com — which shut down post one
internet in India— Naukri.com, Jeevansathi.com, additional brands as well as to train customer service month of acquisition — says, “Mergers and
99acres.com, Shiksha.com apart from Quadrangle representatives. We don’t have any plans to do the acquisitions are on the rise as the space consolidates;
– an offline executive search firm as well as Naukri same as of now, but if we ever do, we would do it for these changes are good as major players with

Myntra
Top selling footwear brands: Puma and Nike Colours of Benetton
closely followed by Adidas and Fila Top 5 categories which sell the most in non-
Top selling accessory brands: Ray Ban, Fossil, metro cities: Footwear is the most popular category
Fcuk, American Tourister, Boss, Baggit, Esprit and amounts to approximately 45% of the entire
Largest selling category: Footwear, closely sales. This is followed by apparel for men and
followed by clothing and accessories. women and accessories such as watches, perfumes,
Total nos of footwear & accessory brands selling bags and wallets. Also recently launched cosmetics
online: Over 150 footwear and accessory brands. and sarees, are seeing fast uptake.
Total nos of SKUs: Stock over 25,000 products. Top 5 footwear brands which sell the most in
Top 10 non-metro cities generating maximum non-metro cities: Nike, Puma, Fila, Adidas
orders: Hyderabad, Pune, Ernakulam, Jaipur, and Converse
Ahmedabad, Guwahati and Chandigarh Top 5 most sold accessory brands in non-
Top 5 brands which sell the most in non-metro metro cities: Nike, American Tourister, Fastrack
cities: Nike, Puma, Fila, Adidas and United and Baggit



superior technology and processes challenge unless companies have a clear
will be able to provide superior service business model. Multiple players engage
quality and experience.” in deep discounting that gets them initial
“Each acquisition that we make is traction and volumes but at the cost of
carefully considered. We have to ensure margins. Eventually, to recover from the
that the benefits in technology, consumer hit, companies need to increase their
base, personnel and services is justified price which drives deal hunters away. Non
by the cost of acquisition,” he adds. sustainable business models and reduced
Abhimanyu Lal, Head-Category margins force companies to merge with
Management, Ebay India, states, larger players who have financial muscle
“Globally, Ebay only looks at acquisitions and expertise to make this business
that help us enhance our technological profitable and sustainable. The industry
expertise, helps us gain geographic will see a lot more consolidation in the
expansion or helps us enter or enhance a near future. This has happened in a large
new business area.” It may be mentioned way in daily deal sites,” Lal further states.
that Ebay has a different business
model and operates as a marketplace Challenges
or an online person-to-person trading After pumping nearly half a billion
platform where sellers list their products dollars in the sector last year, the ‘Group
to reach out to wider masses. The Buying bubble’ went bust with the exit
portal essentially operates on volume of of some of the most renowned brands.
demand and consequent capability to While the reasons for that may have

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indulge in discount selling. been different, the fact remains that any
“If you look at the e-commerce e-commerce business, worldwide, is
industry, sustainability is a major prone to a peculiar set of challenges.

Yebhi
Top selling footwear and accessory brands:
Puma, Adidas, Casio, Blanca, Guess, Aiva and
Samsung
Top 5 brands which sell most in non-metros:
Adidas, Fila, Aiva, Navyfont, Blanca
Top 5 most selling accessory brands: Arrow,
Aiva, HiDesign, Fastrack, Lavie
Top 5 most selling categories in non-metros:
Sports shoes, mobiles & tablets, electronics &
home appliances, women wear, handbags
& backpacks
Top 5 non metros generating maximum
orders: Shillong, Jaipur, Chandigarh,
Hyderabad, Cochin

Jabong
Total nos. of footwear and accessory brands: 200+ brands of shoes
on our website and around 100+ brands for accessories
Top selling footwear and accessory brands: Some of the major
brands are Adidas, Puma, Reebok, Nike, Red Tape, Clarks, UCB,Dolce
& Gabbana, DKNY, FCUK, Calvin Klein, Nautica, Burberry.
Technology & supply chain partners: Inhouse
Total nos of SKUs: 4,000+ SKUs of accessories and 10,000+ SKUs
of shoes
Top 10 non-metros generating maximum demand: Bangalore,
Hyderabad, Pune, Ghaziabad, Gurgaon, Kamrup, North Goa, Khorda,
Chandigarh, Lucknow
Top 5 most selling categories in non-metros: Women’s apparel,
accessories, men’s apparel, men’s footwear, women’s footwear



“Inventory based e-commerce in India is on Delivery is a special feature created to gain trust per cent, can possibly take on brick and mortar
extremely capital inefficient,” Avnish Bajaj, boss of of customers. Even today, a lot of people are not retailing which is growing at 15-20 per cent
Matrix partners, a VC firm was quoted as saying in a comfortable giving out credit card details over the CAGR. Early March this year, American consumer
media report. internet. The first time users generally use CoD but electronics retailer Best Buy shut down 50 stores to
“In India, stocking inventory for 60 to 90 days with we have seen that repeat buyers generally use credit open 100 small mobile locations across the USA.
an annual sales target of US$200m requires working cards as by then they have already built trust on the The move was primarily motivated by two emerging
capital of about US$40m-US$50m,” he further added. brand,” he says. trends in the US – sales of TVs, digital cameras and
To top it all, banks are still reluctant to lend to Jabong.com, Jain informs, has also introduced a videogame consoles had weakened, and sales of
companies with untested business models, almost all ‘Card on Delivery’ method to battle out the lack of tablet computers, smartphones and e-readers had
of it being financed by fickle equity. To secure repeat trust related to security of online payments prevailing increased. Secondly, with the rise of competition
business, most portals offer incredibly low prices, among Indian consumers. “We have noticed that from internet rivals like Amazon.com, shoppers
payment by cash on delivery and, nearly always, a person may not be confident revealing the card weren’t flocking to big-box stores like they used to.
free shipping. Consumers love it, but companies are details online but is confident swiping the card.” Having said that, physical stores still accounted
scratching around for ways to shed the operational For Ebay however, the scenario is surprisingly for more than 95 per cent of retail as Best Buy sold
burden. Ironically, the very things that have propelled different and would bode well for those aiming to $45.9 billion through its stores in 2011 compared to
e-commerce in India could lead to its downfall. stick around in the e-commerce business. “Ebay $48 billion for Amazon.
Cash on delivery (CoD), as a matter of fact is by far India offers various options such as payments via This trend, however, might become relevant
the most popular mode of selling online. These range debit cards, credit cards, net banking, EMIs and even in nascent markets such as India. Certain
from almost 50-80 per cent of the total orders placed cash on delivery. Out of all these methods, cash on merchandise categories might face special
online. This also leads to a considerable rate of return delivery is the least used method, comprising less competition from online retailers specially those
and consequent revenue loss for online retailers. For than 5 per cent of all our payments. This suggests who indulge in discount selling in those specific
Yepme.com, CoD constitutes 80 per cent of the total the trust levels of consumers and their willingness to categories. Another significant advantage that
orders placed. For Myntra, it constitutes almost 60 shop on trusted sources such as Ebay,” Lal says. online retail would have over brick and mortar is the
per cent while for Juvalia & You and Donebynone it ability to reach out to wider masses, where there is
is 80 per cent and 50 per cent respectively. Online vs Offline absence of store brands. Vivek Gaur, CEO, Yepme.
According to Jain of Jabong.com, CoD method The next moot point is whether Indian online retail com states, “In India, physical organised retail
has a direct correlation with consumer trust. “Cash industry, growing at an annual rate of 35-40 for products is not taking off too well in smaller

99Labels
Total nos of footwear and accessory brands selling
online: 500+ brand partners
Top selling footwear and accessory brands:
Ed Hardy, Miss Sixty, D&G, Red Tape, Nike, Puma,
Catwalk, Reebok, Adidas and accessories from Coach,
Guess, Michael Kors, D&G, DKNY, Satya Paul,
Valentino, Christian Lacroix
Brands receiving max traffic: Ed Hardy, Miss Sixty,
D&G, Red Tape, Nike, Puma, Catwalk, Reebok,
Adidas and accessories from Coach, Guess, Michael
Kors, Ferre’, D&G, DKNY, Satya Paul, Valentino,
Christian Lacroix
Total manpower: 100+
Technology & supply chain partners: Inhouse

Shopnineteen
Most selling category: Apparel (tops, dresses and bottoms)
sell the maximum contributing close to 40% of the entire sales.
Top 10 non-metros generating maximum orders: Bangalore,
Hyderabad, Pune, Chandigarh, Jaipur, Bhubaneshwar,
Lucknow, Ahmedabad, Guwahati, Dehradun
Top 5 most selling categories in non-metros: Jewellery, tops,
shoes, dresses, belts
Total nos of SKUs: 750 different styles across 8 product
categories. Shoes form close to 23% of overall sales figure.
Total manpower: 16 employees including executive level staff
Technology & supply chain partners: Working with
renowned courier companies such as Blue Dart, DTDC,
Aramex, First Flight, Chhotu Couriers



towns due to high retail cost. Online shopping is shoppers and over 100 million internet users. This is “in-process” text message the next day around 7 AM
convenient and is picking up fast even in non- of a population of over 1.2 billion. The e-commerce and be notified that our order is ready to be picked
metros; hence e-commerce is the perfect route ecosystem is still evolving here. Logistics companies up usually before 8 AM. This way customers would
to deliver products. We are getting orders from are also focusing on e-commerce and increasing have the liberty to shop even after the closing hours
more than 580 cities across India. Online shopping geographic coverage to cater to e-commerce of the store provided they are assured of the quality
portals expect the number of orders coming in merchant demand,” he further elaborates. of merchandise and services of the retailer.
from these areas to go up further due to rising Leading department store chains such as
internet penetration, growing purchasing power and Shoppers Stop, Lifestyle, Globus and Future Back to the future
adoption of latest mobile devices.” Group’s Futurebazaar.com have ventured into While internet and brick and mortar retailing
Ebay’s Lal states, “Over the past few years, we have online shopping, but there is a substantial difference are here to stay and as a matter of fact, peacefully
seen acceleration in sales from tier II and tier III between the attention that is paid to a department coexist, online retailers still have a lot of pulling
locations. For the many Indians located outside the store’s online shopping platform and, retailers which up of socks to do, yet. So what is each one of them
few cities where modern retail has penetrated, online are purely selling online. planning to do?
shopping provides access to brands and products That said, a tip-off might come handy, something “We want to take the technology enablement to the
which are not available in their city or town, bridging that international store retailers such as Lowe and next level of making the products as close to reality
distribution inefficiencies. Non-metro consumers Home Depot and Walmart have been implementing as possible. In next five years, as the scale goes up,
increasingly aspire to consume brands and lifestyle as well. To encourage shoppers to buy online, a brick there will be deployment of advanced ERPs, product
products. They have the spending power, but no and mortar retailer, can provide for a ‘Store pick-up’ lifecycle management softwares, advanced CRM
access to products in their city. We see these aspiring option of online ordering. Under this, if customers softwares, etc,” says Pahwa of Shopnineteen.com.
consumers from smaller cities latching onto online register giving their email and telephone number, “We plan to add shades and frames, more sub-
shopping like never before.” the retailer would send an in-progress status update. categories of accessories and workout wear in near
“Ebay India has over 3 million registered users This would let the shoppers know that their order is future,” he further informs adding “we are India’s
from 3,311 cities covering all 28 States and 7 Union “in-process” (someone is walking around in the store first e-commerce site to have video content for each
Territories in India. Ebay India also has over 1.8 and getting the items for them) and when the order apparel and India’s first site to allow people to make
million fans on Facebook. E-commerce is still at a is actually ready for pickup. Thus, if we place an order wishlists of multiple products and share them with
nascent stage in India with over 10 million internet at 11 PM (when the store is closed), we would get an friends to take opinion on what to buy.”

Donebynone
Top 5 categories selling most in
non-metro towns: Topwear, footwear,
handbags, jewellery
Total nos of SKUs: A fast fashion
brand bringing new styles every
week. Have more than 300 styles
across categories for the customer to
choose from.
Total manpower: 35 employees
Technology & supply chain
partners: Inhouse

Juvalia & You
Total nos of SKUs: Total number of
SKUs online is about 300
Total manpower: 100 + employees
Technology & supply chain
partners: Microsoft Navision and a
host of international freight operators
for incoming SCM



“We will be further introducing a host of features
to enhance the online shopping experience. Tools
like virtual wardrobe and virtual dressing room will
be added to the existing features,” he adds.
Aggarwal of Yebhi.com says, “We have introduced
many an initiative all focused at ensuring world class
shopping experience for our consumers. We have
introduced Yebhi Champs – B School graduates
who are the face of Yebhi.com helping with the last
mile logistics.”
“The automations, technology and policies
of Yebhi.com like one-click automatic returns,
our colossal state-of-art fulfillment centre,
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in-house courier and logistics, 100 days return
policy, ‘Try and Buy’ policy, EMI etc are all
to ensure that consumers are 100 percent

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satisfied and recommend the Yebhi.com
experience.”
For Ebay, the future centres around electronic
gadgets, specially smartphones. “Globally, Ebay
“We are planning to revamp our offerings in the order back. We have received positive response has been at the forefront of commerce on mobiles.
near future and we are constantly revamping back- from our shoppers and are planning to expand our It is very likely that a majority of the next 100
end technology,” Bansal of Valyoo technologies says. services to other cities as well,” Yepme.com’s million internet users in India, will have their
Swaroop of 99Labels.com states, “Our aim is Gaur describes. first and pre-dominant experience of internet on
to increase product offerings on 99labels.com by “One of the hurdles that most online shopping mobile devices, either smartphones or tablets,”
bringing in diverse brands, better sales, more variety portals face today in reaching out to non-metro says Abhimanyu Lal of Ebay.
and may even increase our categories. As far as consumers is the language barrier. We at Yepme. “We have been at the forefront of pioneering
technology goes, we are constantly upgrading ours com have gone a step ahead by introducing our e-commerce in India and continue to scale our
as we understand the industry is changing and all portal in Hindi followed by launch of other regional business at a very rapid growth rate. We have
efforts are going into improving the online shopping languages viz: Tamil, Telugu, Malayalam and established strong brand equity, large and loyal user
experience, benefits and usability. We want to Kannada, to cater to a wide range of customers pan base and are a strong global technology platform and
also work towards improving the look, feel and India,” he adds. are bullish about further strengthening our leadership
functionality of our site.” “We are in the planning stages of launching position in the market.”
“We are running a pilot project ‘Try Karo Phir our private label primarily to fill existing gaps in “We plan to continue focusing on evangelising
Buy karo’ where we provide risk free shopping to the market. We are targeting the third quarter to e-commerce to Indian consumers and continue
our users. Under this project, we collect money launch our inhouse label and already in talks with expanding the market, focus on enhancing user
seven days after delivery and only on the assurance manufacturers to source materials,” Ashutosh experience. Pioneering mobile commerce, which is an
that customers like our product. Lest, we take our Lawania of Myntra.com informs. area of great focus for eBay,” Lal concludes.

Valyoo Technologies
(Bagskart.com, Lenskart.com, Jewelkart.com, Watchkart.com)
Most selling categories:
Eyewear, watches
Total manpower: 100
Total nos of SKUs:
10,000 + SKUs
Technology & supply
chain partners: Inhouse
warehousing. Work with
logistics partners and
courier companies for
deliveries, especially in
tier 2 and tier 3 cities.


Ecommerce market in India

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