CERTIFICATION

This is to Certify that the project entitled EXPANDING e-COMMERCE BUSINESSES- A

COMPARITIVE STUDY made by has been completed under my guidance and I am
satisfied with the work carried out by her. The project is an original work, has not been
submitted earlier to any other institution. The project was successfully carried out for the
partial fulfillment of BBA (III Sem) from Maharaja Surajmal Institute, Janakpuri, New Delhi,
affiliated to Guru Gobind Singh Indraprasta University, during the academic year 2014-15.

Dr. Poonam Ahlawat

(Project guide)

DECLARATION

I hereby declare that the Project work entitled EXPANDING e-COMMERCE

BUSINESSES- A COMPARITIVE STUDY is an authentic work carried out by me under
the guidance of administration and this has not been submitted anywhere else for the award
of any other degree or Diploma.

ACKNOWLEDGEMENT
Every project big or small is successful largely due to the effort of a number of wonderful
people who have always given their valuable advice or lent a helping hand. I sincerely
appreciate the inspiration; support and guidance of all those people who have been
instrumental in making this project a success.
I would like to express my deepest appreciation to all those who provided me the possibility
to complete this report. A special gratitude I give to our project guide, Dr. Poonam Ahlawat,
whose contribution in stimulating suggestions and encouragement, helped me to coordinate
my project especially in writing this report.
I would also like to thank all the faculty members of Maharaja Surajmal Institute for their
critical advice and guidance without which this project would not have been possible.

Last but not the least I place a deep sense of gratitude to my family members and my friends
who have been constant source of inspiration during the preparation of this project work.

TABLE OF CONTENTS
Title

Page No.

CERTIFICATE
DECLARATION
ACKNOWLEDGEMENT
CHAPTER PLAN:
CHAPTER I : INTRODUCTION
OBJECTIVES OF THE STUDY
RESEARCH METHODOLOGY
LIMITATIONS OF THE STUDY

CHAPTER II : PROFILE OF THE ORGANISATION(S)

CHAPTER III: ANALYSIS AND INTERPRETATION OF DATA
CHAPTER IV: CONCLUSIONS AND RECOMENDATIONS
Bibliography

CHAPTER-I:
INTRODUCTION

INTRODUCTION
E-Commerce in India
India has an internet user base of about 250.2 million as of June 2014. The penetration of
e-commerce is low compared to markets like the United States and the United Kingdom but
is growing at a much faster rate with a large number of new entrants. The industry consensus
is that growth is at an inflection point.
Over the last two decades, rising internet and mobile phone penetration has changed the way
we communicate and do business. E-commerce is relatively a novel concept. It is, at present,
heavily leaning on the internet and mobile phone revolution to fundamentally alter the way
businesses reach their customers. While in countries such as the US and China, e-commerce
has taken significant strides to achieve sales of over 150 billion USD in revenue, the industry
in India is, still at its infancy.
However over the past few years, the sector has grown by almost 35% CAGR from 3.8
billion USD in 2009 to an estimated 12.6 billion USD in 2013.Industry studies by IAMA2 I
indicate that online travel dominates the e-commerce industry with an estimated 70% of the
market share.
However, e-retail in both its forms; online retail and market place, has become the fastestgrowing segment, increasing its share from 10% in 2009 to an estimated 18% in 2013.
Calculations based on industry benchmarks estimate that the number of parcel check-outs in
e-commerce portals exceeded 100 million in 2013.
This share represents a miniscule proportion (less than 1%) of Indias total retail market, but
is poised for continued growth in the coming years. If this robust growth continues over the
next few years, the size of the e-retail industry is poised to be 10 to 20 billion USD by 20172020. This growth is expected to be led by increased consumer-led purchases in durables and
electronics, apparels and accessories, besides traditional products such as books and audiovisuals.
Unique to India (and potentially to other developing countries), cash on delivery is a referred
payment method. India has a vibrant cash economy as a result of which 80% of Indian ecommerce tends to be Cash on Delivery. However, COD may harm e-commerce business in
India in the long run and there is a need to make a shift towards online payment mechanisms.
Similarly, direct imports constitute a large component of online sales. Demand for
international consumer products (including long-tail items) is growing much faster than incountry supply from authorised distributors and e-commerce offerings.

E-commerce logistics models: A radical shift from regular logistics

The strong emergence of e-commerce ill place an enormous pressure on the supporting
logistics functions. The proposition of e-commerce to the customer is in offering an almost
infinite variety of choices spread over an enormous geographical area. Firms cannot compete
solely based on sheer volumes in todays ever-evolving, information symmetric and
globalised world of e-commerce. Instead, the realm of competition has shifted to delivering
to ever-shortening delivery timeliness, both consistently and predictably. Negligible or zero
delivery prices, doorstep delivery, traceability solutions and convenient reverse logistics have
become the most important elements of differentiation for providers.
While the current logistics challenges relating to manufacturing and distribution of
consumer products and organised retail are well-known, the demands of e-commerce raise
the associated complexities to a different level. E-commerce retailers are well-aware of
these challenges and are cognizant of the need to invest in capital and operational assets.

Reaching the customer: Going beyond the traditional definition

The essence of e-retailing is in its ability to transcend physical boundaries and reach
customers in a manner different from the traditional brick-and- mortar stores, to their very
doorstep. However, the base of the e-retailing model is technology and logistical solutions
that facilitates the customer acquisition and the final reach process. E-commerce further
brings to the table vagaries in customer orders accompanied with difficult scenarios such as
free delivery, order rescheduling, cancellation, returns and cash-on-delivery.
Additionally, an expected minimised turn-around-time (TAT) which will potentially lead
to word-of-mouth publicity, feedback and customer retention to the e-portal or website.
An information network which shares updated information with respect to inventory
status, demand schedules and forecasts, shipment schedules and promotion plans among
all the stakeholders of the supply chain will form the backbone of an e-retailer.
India's e-commerce market was worth about $3.8 billion in 2009, it went up to $12.6 billion
in 2013. In 2013, the e-retail market was worth US$ 2.3 billion. About 70% of India's ecommerce market is travel related. India has close to 10 million online shoppers and is
growing at an estimated 30% rate vis--vis a global growth rate of 810%. Electronics and
Apparel are the biggest categories in terms of sales.
This study is a comparative between the four major players in the Indian E-Commerce
market. They are- Flipkart.com, Snapdeal.com, Amzon.com, eBay.com

Snapdeal.com is an online marketplace, headquartered in New Delhi, India. The company

was started by Kunal Bahl, a Wharton graduate as part of the dual degree M&T Engineering
and Business program at Penn, and Rohit Bansal, an alumnus of IIT Delhi.
Snapdeal.com was started in February 2010 as a daily deals platform inspired
by Groupon.com but expanded in September 2011 to become an e-commerce company via a
marketplace model after watching Flipkart's success in the local market.
With 20 million registered users, Snapdeal is one of the first and largest online market places
in India offering an assortment of 4 million+ products across diverse categories from over
20,000 sellers, shipping to 4,000 towns and cities in India.

Flipkart is an electronic commerce company founded in 2007, by Sachin Bansal and Binny
Bansal. They had been working for Amazon.com previously. The business was formally
incorporated as a company in October 2008 as Flipkart Online Services Pvt. Ltd. During its
initial years, Flipkart focused only on books, and soon as it expanded, it started offering other
products like electronic goods, air conditioners, air coolers, stationery supplies and life style
products and e-books. Flipkart now employs more than 9000 people
. Flipkart allows payment methods such as cash on delivery, credit or debit card
transactions, net banking, e-gift voucher and card swipe on delivery. It operates exclusively in
India, where it is headquartered in Bangalore, Karnataka.

Flipkart.com is registered in Singapore, and owned by a Singapore-based holding

company. Flipkart has launched its own product range under the name "DigiFlip", offering
camera bags, pen-drives, headphones, computer accessories, etc.
Flipkart also recently launched its own range of personal healthcare and home appliances
under the brand "Citron". The brand offers 60 day replacement guarantee and On-site repair
support under its warranty terms.
Legally, Flipkart is not an Indian company since it is registered in Singapore and majority of
its shareholders are foreigners. Because foreign companies are not allowed to do multi-brand
e-retailing in India, Flipkart sells goods in India through a company called WS Retail. Other
third-party sellers or companies can also sell goods through the Flipkart platform.

Amazon.com, Inc. is an American international electronic commerce company with

headquarters in Seattle, Washington. It is the largest Internet based company in the United
States. Amazon.com started as an online bookstore, but soon diversified,
selling DVDs, VHSs, CDs, video and MP3 downloads/streaming, software, video
games, electronics, apparel, furniture, food, toys, and jewellery.
The company also produces consumer electronicsnotably, Amazon Kindle e-book
readers, Kindle Fire tablets, Fire TV and Fire Phone and is a major provider of cloud
computing services.
Amazon has separate retail websites for United States, United Kingdom & Ireland, France,
Canada, Germany, Italy, Spain, Australia, Brazil, Japan, China, India and Mexico, with sites
for Sri Lanka and South East Asian countries coming soon.
Amazon also offers international shipping to certain other countries for some of its
products. In 2011, it had professed an intention to launch its websites in Poland Netherlands,
and Sweden. An Austrian website operates as part of the German website.

eBay Inc., is an American multinational corporation and e-commerce company,

providing consumer-to-consumer & business-to-consumer sales services via Internet.
It is headquartered in San Jose, California, United States. eBay was founded by Pierre
Omidyar in 1995, and became a notable success story of the dot-com bubble; it is a multibillion dollar business with operations localized in over thirty countries.
The company manages eBay.com, an online auction and shopping website in which people
and businesses buy and sell a broad variety of goods and services worldwide.
eBay.com is not a free website, rather it charges users an invoice seller fee on the basis of if
they have sold or listed any items.
Reportedly, eBay was simply a side hobby for Omidyar until his Internet service provider
informed him he would need to upgrade to a business account due to the high volume of
traffic to his website
. The resulting price increase (from $30/month to $250) forced him to start charging those
who used eBay, and was not met with any animosity.

OBJECTIVES OF THE STUDY

The project aims at studying the changing trends of Indian customer behaviour from in-store
purchasing to online purchasing .
E-commerce has come a long way since its inception and is only getting bigger. As
technology continues to grow rapidly, e-commerce retailers are adopting newer techniques to
facilitate sellers and buyers to sell and buy online more efficiently, thanks to ever dropping
rates of internet surfing both for web and mobile interfaces which is complimenting to the
soaring population of internet users.
This project aims at identifying the key players in the e-Commerce markets. The study
specifically focuses on comparing the investment and market strategies of :
Snapdeal.com

Domestic Players

Flipkart.com
eBay.com

International players

Amazon.com
According to a study by Accel Partners, online shopping of physical goods in India will grow
to US$ 8.5 billion in 2016 and the number of online shoppers in India will be more than
double to 40 million. The internet user base is predicted to increase to 300 million by 2015.
The study shall help compare Cross-cultural management styles (including the Human
Resource policies) between the domestic and international players.
Indian e-commerce and online shopping are set to witness greater heights in the coming
years, not just owing to the increasing internet population, but also due to the changing
dynamics of the supporting ecosystem. The key players in the market are undertaking
rigorous efforts to further enhance the areas like payment structure and logistics.
Moreover, the Indian consumers perception of online shopping has experienced a substantial
change and for the good. In view of these developments, both the investors and the aspiring
e-commerce players have been granted numerous opportunities, who were thus far limiting
themselves to the sidelines. Today, they are all taking a keen interest in the countrys ecommerce market.
Therefore , the project shall help understand the business operating model of the key players
in the Indian e-Commerce market and project the future trends of e-Commerce business in
India.

RESEARCH METHODOLOGY

Research in common parlance refers to a search for knowledge. Once can also define
research as a scientific and systematic search for pertinent information on a specific topic.
The purpose of research is to discover answers to questions through the application of
scientific procedures.
The main aim of research is to find out the truth which is hidden and which has not been
discovered as yet.
The research for this project report has been carried out using Secondary Data sources.
Secondary Data Sources: Secondary data is data collected by someone other than the user.
Common sources of secondary data for social science include censuses, organisational
records and data collected through qualitative methodologies or qualitative research.
Primary data, by contrast, are collected by the investigator conducting the research.
As is the case in primary research, secondary data can be obtained from two different
research strands:

Quantitative: Census, housing, social security as well as electoral statistics and other
related databases.

Qualitative: Semi-structured and structured interviews, focus groups transcripts, field

notes, observation records and other personal, research-related documents.

A clear benefit of using secondary data is that much of the background work needed has
already been carried out, for example: literature reviews, case studies might have been carried
out, published texts and statistics could have been already used elsewhere, media promotion
and personal contacts have also been utilized.
This wealth of background work means that secondary data generally have a pre-established
degree of validity and reliability which need not be re-examined by the researcher who is reusing such data.
Furthermore, secondary data can also be helpful in the research design of subsequent primary
research and can provide a baseline with which the collected primary data results can be
compared to. Therefore, it is always wise to begin any research activity with a review of the
secondary data.

LIMITATIONS OF STUDY

The project report suffers from the following limitations in research:

Self-reported Data: Most of the data used for the project report has been collected from the
internet and other published sources. Thus the authenticity of such data cannot be fully
confirmed.

Overseas operations: Two of the companies (Amazon.com, e-Bay.com) studied for

comparison are international players in the e-Commerce market and thus have overseas
operations. Thus all accurate data relating to these companies is not easily accessible.

Time : The topic of comparative analysis of the players in e-Commerce market in India is a
wide topic of study and thus the time required for such a study is a lot. Thus any amount of
time provided is not enough though I have tried to complete this project within a limited time
period

CHAPTER-II :
PROFILE
OF
THE
ORGANISATION(S)

PROFILE OF THE ORGANISATION(S)

The following section shows the profile of the four organisations compared in this report.

Flipkart.com

Flipkart.com is an emerging Indian online mega-store. Flipkart has followed has same
business model as of Amazon.com i.e. starting from selling books therefore we can call it
Flipkart-the Amazon of India. However, Flipkart is now regional based e-Business that is
only targeting the Indian market.
Flipkart was started by Sachin Bansal and Binny Bansal (not brothers) who were former
Amazon employees. Flipkart works with the aim of making goods easily available at the
doorstep of anyone with internet access.
Flipkart entered the consumer electronics category with launch of mobile phones in 2010.
Today, Flipkart is present across various categories including movies, music, games, mobiles,
cameras, computers, healthcare and personal products, home appliances and electronics,
stationery, perfumes, toys, apparels, shoes and still counting!
It is now one of the leading e-Commerce players in India, currently ranks at the top 20
websites in India, spread in 37 cities with 11.5 million plus million book titles, 14 different
categories, 3 million plus registered users and sale of 45000 items per day.

The innovative e-Commerce services provided by Flipkart include:

Cash on Delivery
30-day replacement policy
Easy Monthly Instalment options (EMI)
Free shipping
Discounted prices and deals

The company was initially self-funded by both of its co-founders spending Rs.4,00,000 to set
up the business. They later raised funds from Private Equity Investors i.e. Accel Partners and
Tiger Global Management of $31 million.
In the year 2010, the company acquired WeRead, a social book discovery tool.
In 2011, Mime360, a digital content platform company and Chakpak.com a bollywood news
site; and its most recent acquisition Letsbuy.com which is Indias second largest e-retailer in
electronics.

Flipkart employees 45000+ people

2 million sales unit and 4million visitors per month
11.5 million titles, Flipkart is Indias largest online book retailer
Registered user base of 4million customers
Ships out as many as 45000 items per day, clocking daily sales of approximately Rs25
Cr
Flipkart is now investing in expanding its network of distribution centres,
procurement operations which is now only in 8 cities in the country, so as to reach
more and more Indian cities.
The company is even setting up its own delivery network which is now in 37 cities,
by which company can save cost associated to the outsourced shipping an logistic
function and is set to expand this further by this year.

Thus Flipkart has been successful by providing customers with great services like cash on
delivery, 30-day replacements etc.

Flipkart's reported sales were 40 million in FY 20082009,[33][34] 200 million in FY 2009

2010 and 750 million for FY 20102011. In FY 20112012, Flipkart crossed the 5 billion
(US$100 million) mark as Internet usage in the country increases and people got accustomed

to making purchases online. Flipkart projects its sales to reach 10 billion by end of the year
2014. Flipkart is aiming at generating a revenue of 50 billion (US$0.81 billion) by 2015.
On November 2012, Flipkart became one of the companies being probed for alleged
violations of FDI regulations of the Foreign Exchange Management Act, 1999.
In July 2013, Flipkart raised USD 160 million from private equity investors.
In October 2013, it was reported that Flipkart had raised an additional $160 million from new
investors Dragoneer Investment Group, Morgan Stanley Wealth Management, Sofina SA
and Vulcan Inc. with participation from existing investor Tiger Global.
On 26 May 2014, Flipkart announced that it has raised $210 million from Yuri Milners DST
Global and its existing investors Tiger Global, Naspers and Iconiq Capital.
In early July 2014, it was also highly speculated that Flipkart was in negotiations to raise at
least $500 million, for a likely listing in the US for 2016.
On 29 July 2014, Flipkart announced that it raised $1 billion from Tiger Global Management
LLC, Accel Partners, and Morgan Stanley Investment Management and a new investor
Singapore sovereign-wealth fund GIC.
On 6 October 2014, Flipkart sold products worth INR 650Crore in 10 hours in a special oneday event - "The Big Billion Day", claiming they had created e-commerce history, but their
hard-won reputation for good customer service suffered because of technical problems, and
angry reactions on social media from buyers disappointed with the pricing and availability of
products. It claimed to sell a whopping 5 lakh mobile handsets, five-lakh clothes and shoes
and 25,000 television sets within hours of opening its discounted sale at 8 AM.

Snapdeal.com

Snapdeal is an online marketplace offering best priced deals on branded products such as
mobiles, electronics, apparel and accessories. featuring a wide assortment of products across
categories like Mobiles, Electronics, Fashion accessories, Apparel and Footwear, Kids, Home
and Kitchen, Sports, Books; and services like Restaurants, Spas & Entertainment amongst
others.
With over 18 million members, Snapdeal.com is the shopping destination for millions of
internet users across the country. It has been rated as the number 1 e-commerce site in India
by Dataquest/Sapient E-commerce Survey 2011.
A dynamic and vibrant company, Snapdeal provides a fun working environment to its
employees and is currently 1000+ people strong. Investors in the company include Bessemer
Venture Partners, IndoUS Ventures and Nexus Venture Partners.
Headquartered in Delhi, Snapdeal.com was launched in February 2010. The company was
founded by Kunal Bahl, a Wharton graduate and Rohit Bansal, alumnus of IIT Delhi who
were friends since school.
Snapdeal.com gets the best offer possible from the merchants from around 65 cities across
India and then deducts a small amount f commission.
Snapdeal.com aims at showing at least 40-90% off in the deals from what actually one has o
pay. Depending upon how good the offer is Snapdeal deducts their commission starting from
Rs.99 going up to Rs.299.
More than 50-60 thousand products are available online for customers to choose from.

Snapdeal.com was started in February 2010 as a daily deals platform inspired

by Groupon.com but expanded in September 2011 to become an e-commerce company via a
marketplace model after watching flipkart's success in the local market.With 20 million
registered users, Snapdeal is one of the first and largest online market places in India offering
an assortment of 4 million+ products across diverse categories from over 20,000 sellers,
shipping to 4,000 towns and cities in India.
Snapdeal has recently launched its mobile app for iOS users. The app, already available for
Windows and Android users, provides users access to Snapdeal's various product categories
Snapdeal has received 5 rounds of funding:

Round 1: In January 2011, Snapdeal received a funding of $12 million from Nexus
Venture Partners and Indo-US Venture Partners.

Round 2: In July 2011, the company raised a further $45 million from Bessemer
Venture Partners, along with existing investors Nexus Venture Partners and Indo-US
Venture Partners.

Round 3: Snapdeal then raised a 3rd round of funding worth $50 million from eBay
and received participation from existing investors i.e. Bessemer Venture Partners,
Nexus Venture and IndoUS Venture Partners.

Round 4: Snapdeal received its 4th round of funding of $133 million on Feb-2014.
The 4th round of funding was led by eBay with all the current institutional investors,
including Kalaari Capital, Nexus Venture Partners, Bessemer Venture Partners, Intel
Capital and Saama Capital all participating.

Round 5: Snapdeal received its 5th round of funding of $105 million in May-2014.
The 5th round included investments by Blackrock, Temasek Holdings, PremjiInvest and
others. The round valued SnapDeal at $1,000,000,000.

Round 6: Snapdeal received its 6th round of funding in Oct-2014 from Softbank with
investments worth $627 million in fresh capital. This makes SoftBank the largest investor
in Snapdeal.

Acquisitions

In June 2010, Snapdeal acquired Bangalore-based group buying site, Grabbon.com.

In April 2012, Snapdeal acquired esportsbuy.com, an online sports goods retailer

based out of Delhi.
In May 2013, Snapdeal acquired Shopo.in, an online marketplace for Indian
handicraft products.

In the year 2012-13 Snapdeal had said that it expects to garner revenues of about
600 crore (US$97 million). Betting big on the growth of mobile commerce, Kunal Bahl, the
CEO of Snapdeal, said at present 15-20 per cent of the sales on Snapdeal comes through
m-commerce.
Snapdeal.com expects the total sale of products traded on its platform to cross
2000 crore (US$320 million) in the fiscal year 2013-14 helped by its robust growth in the
past two years and the growing popularity of e-commerce in India.
In June 2014, Snapdeal announced that it has achieved the milestone of 1000 sellers on its
plarform getting sales of over Rs 1 crore.
In the 3rd round of funding of $50 million eBay came out as the largest investor in
Snapdeal. The investment also includes a commercial partnership under which eBay will get
access to Snapdeals 20 million registered users, logistics software and distribution network.
Snapdeal co-founder Kunal Bahl told medianama that Snapdeal will offer a limited number
of products on eBay India and eBay too will list its merchandise on Snapdeal, following the
partnership.
In its 4th round of funding Snapdeal raised fresh capital of $134 million with eBay Inc,
leading the round.
With this round eBay has increased its stake in Snapdeal, becoming its largest investor.
Snapdeal Co-founder and CEO Kunal Bahl said that eBay's second round of investment in
Snapdeal as an endorsement of strategy and progress Snapdeal has made in year.

Amazon.com

Amazon.com, Inc. (Amazon.com) , incorporated on May 28, 1996, serves consumers through
its retail websites and focus on selection, price, and convenience. The Company offers
programs that enables sellers to sell their products on its website and their own branded
websites and to fulfil orders through them, and programs that allow authors, musicians,
filmmakers, application developers, and others to publish and sell content.
The Company operates in two segments: North America and International. The Company
serves consumers through its retail websites, and focus on selection, price, and convenience.

The Company designs its websites to enable millions of products to be sold by the Company
and by third parties across dozens of product categories. Customers access its websites

directly and through its mobile websites and apps. It also manufactures and sells Kindle
devices.

In May 2012, the Company acquired Kiva Systems, Inc. (Kiva). In October 2013,
Amazon.com Inc acquired TenMarks Education Inc. Effective February 5, 2014,
Amazon.com Inc acquired Double Helix Games LLC. Effective May 6, 2014, the Company
acquired Iconology Inc.

The Company offers its customers the lowest prices possible through low everyday product
pricing and shipping offers, including through membership in Amazon Prime, and to improve
its operating efficiencies so that it can continue to lower prices for its customers.

The Company also provides easy-to-use functionality, fast and reliable fulfilment, and timely
customer service. It offers programs that enable sellers to sell their products on its websites
and their own branded websites and to fulfil orders through them.

The Company serves developers and enterprises of all sizes through Amazon Web Services
(AWS), which provides access to technology infrastructure that enables virtually any type of
business.

The Company serves several authors and independent publishers with Kindle Direct
Publishing. The two segments of Amazon operate as follows:

North America

North America segment consists of amounts earned from retail sales of consumer products
and subscriptions through North America-focused websites such as www.amazon.com and
www.amazon.ca and include amounts earned from AWS. This segment includes export sales
from www.amazon.com and www.amazon.ca.

International

The International segment consists of amounts earned from retail sales of consumer products
and subscriptions through internationally-focused websites. This segment includes export
sales from these internationally based websites, including export sales from these sites to
customers in the U.S. and Canada.
This American international electronic commerce company with headquarters in Seattle,
Washington is the largest Internet based company in the United States. Amazon.com started
as an online bookstore, but soon diversified, selling DVDs, VHSs, CDs, video and MP3
downloads/streaming, software, video games, electronics, apparel, furniture, food, toys, and
jewellery. The company also produces consumer electronicsnotably, Amazon Kindle ebook readers, Kindle Fire tablets, Fire TV and Fire Phone and is a major provider of cloud
computing services.
Amazon product lines include several media (books, DVDs, music CDs,
software, videotapes, and software), apparel, baby products, consumer electronics, beauty
products, gourmet food, groceries, health and personal-care items, industrial & scientific
supplies, kitchen items, jewellery and watches, lawn and garden items, musical
instruments, sporting goods, tools, automotive items and toys & games.
The company launched amazon.com Auctions, a web auctions service, in March 1999.
However, it failed to chip away at the large market share of the industry pioneer, eBay.
Later, the company launched a fixed-price marketplace business, zShops, in September 1999,
and the now defunct partnership with Sotheby's, called Sothebys.amazon.com, in November.
Auctions and zShops evolved into Amazon Marketplace, a service launched in November
2000 that let customers sell used books, CDs, DVDs, and other products alongside new items.
As of October 2014, Amazon Marketplace is the largest of its kind, followed by similar
marketplaces from Sears, Rakuten and Newegg.
In August 2007, Amazon announced AmazonFresh, a grocery service
offering perishable and nonperishable foods. Customers can have orders delivered to their
homes at dawn or during a specified daytime window. Delivery was initially restricted to
residents of Mercer Island, Washington, and was later expanded to several ZIP codes in
Seattle proper. AmazonFresh also operated pick-up locations in the suburbs of Bellevue and
Kirkland from summer 2007 through early 2008.
In 2012, Amazon announced the launch of Vine.com for buying green products, including
groceries, household items, and apparel. It is part of Quidsi, the company that Amazon

bought in 2010 that also runs the sites Diapers.com (baby), Wag.com (pets), and YoYo.com
(toys). Amazon also owns other e-commerce sites like Shopbop.com, Woot.com,
and Zappos.com.
Amazon's Subscribe & Save program offers a discounted price on an item (usually sold in
bulk), free shipping on every Subscribe & Save shipment, and automatic shipment of the item
every one, two, three, or six months.
In 2013, Amazon launched its site in India, amazon.in. It has started with electronic goods
and plans to expand into fashion apparel, beauty, home essentials, and healthcare categories
by the end of 2013. Amazon.in arranged a Diwali Dhamaka Week sale from 10 to 16 October
2014 exclusively to boost up its business in Indian market.
In July, Amazon had said it will invest $2 billion (Rs 12,000 crore) in India to expand
business, after its largest Indian rival Flipkart announced $1 billion in funding.

eBay.com

eBay Inc., incorporated on March 13, 1998, is a global technology company. The Company
by providing online platforms, tools and services to help individuals and small, medium and
merchants around the globe engage in online and mobile commerce and payments, the
Company can facilitate transactions.

The Company also generates revenue through marketing services, classifieds and
advertising.
The Company has also created an open source platform that provides software developers
and merchants access to its applications programming Interfaces (APIs), to develop software
and solutions for commerce. Its developer community includes more than 800,000 members.
In December 2013, the Company announced that it has completed the acquisition of
acquisition of Braintree effective February 19, 2014, eBay Inc acquired PhiSix Inc.
Sellers can choose to list their products and services through fixed price listings on eBay.com,
its Marketplaces platform, and it classifieds websites or through an auction-based format on
eBay.com.
Its fixed price format allows buyers and sellers to close transactions at a pre-determined price
set by the seller, but also allows sellers to signal that they would be willing to close the
transaction at a lower price through the Offer feature. Its auction-style format allows a seller
to select a minimum price for opening bids.
In addition, its eBay Stores format enables sellers to exhibit all of their listings in a single
place on one of its eBay Marketplaces platforms and to describe their respective businesses
through customized pages.

eBay Stores also provides sellers with tools to build, manage, promote and track their
businesses. Its classified websites are available in over 1,000 cities globally. Its classifieds
websites include Den Bla Avis, BilBasen, eBay Classifieds (including eBay Anuncios, eBay
Kleinanzeigen and eBay Annunci), Gumtree, Kijiji, LoQUo, Marktplaats.nl, mobile.de and
Alamaula. Its craigslist, Inc. operates the craigslist classifieds websites.
The Company provides a credit offering through the Bill Me Later service, which allows
qualifying the United States buyers to obtain a revolving line of credit at the point of sale
from a third-party chartered financial institution, WebBank.
When a consumer makes a purchase using a Bill Me Later credit product issued by a
chartered financial institution, the chartered financial institution extends credit to the
consumer, funds the extension of credit at the point of sale and remits funds to the merchant.
PayPal has developed a number of trust and safety programs, including PayPal's Seller
Protection and Purchase Protection Programs.
These programs provide additional protection to certain account holders who pay or receive
payment for their transactions through PayPal on or off eBay.com in certain key geographies.
PayPal's Seller Protection Program covers sellers in certain key geographies who follow
specific shipping and handling practices against claims that a transaction was not authorized
by the buyer or that the item was not received.
PayPal's Purchase Protection Program reimburses the buyer, subject to specified limitations,
for qualified purchases using PayPal on or off eBay.com in certain key geographies if the
buyer does not receive the item or, in limited markets, if the item is significantly not as

described. In some non-U.S. markets, protection for buyers is limited to a maximum amount
per transaction.
"I got it on eBay" has barrelled its way into the lexicon of the new millennium, placing a
cyber-grin on the corporate face of this online auctioneer. Trading about $2,000 worth of
goods every second, eBay offers an online forum for selling merchandise worldwide, from
fine antiques to the latest video games. eBay generates revenue through listing and selling
fees and through advertising, and boasts more than 120 million users.
As eBay is a huge, publicly visible market, it has attracted a great deal of interest from
economists, who have used it to analyze many aspects of buying and selling behaviour,
auction formats, etc., and compare these with previous theoretical and empirical findings.
Just as economists have shown interest in eBay's operations, computer information systems
researchers have also shown interest in eBay. Recently Michael Goul, Chairman of the
Computer Information Systems department of the W. P. Carey School of Business at Arizona
State University, published an academic case based on eBays big data management and use.
In the case, Goul discusses how eBay is a data-driven company which processes 50 petabytes
of data a day.

eBay uses a system that allows different departments in the company to check out data from
their data mart into sandboxes for analysis. According to Goul, eBay has already experienced
significant business successes through its data analytics. To continue improving the business
through data-driven decision making, eBay employs 5,000 data analysts.
Millions of collectibles, decor, appliances, computers, furnishings, equipment, domain
names, vehicles, and other miscellaneous items are listed, bought, or sold daily on eBay.
In 2006, eBay launched its Business & Industrial category, breaking into the industrial
surplus business. Generally, anything can be auctioned on the site as long as it is not illegal
and does not violate the eBay Prohibited and Restricted Items policy.
Services and intangibles can be sold, too. Large international companies, such as IBM, sell
their newest products and offer services on eBay using competitive auctions and fixed-priced
storefronts.
Separate eBay sites such as eBay US and eBay UK allow the users to trade using the local
currency. Software developers can create applications that integrate with eBay through
the eBay API by joining the eBay Developers Program.

In June 2005, there were more than 15,000 members in the eBay Developers Program,
comprising a broad range of companies creating software applications to support eBay buyers
and sellers as well as eBay Affiliates.
Controversy has arisen over certain items put up for bid. For instance, in late 1999, a man
offered one of his kidneys for auction on eBay, attempting to profit from the potentially
lucrative (and, in the United States, illegal) market for transplantable human organs.
On other occasions, people and even entire towns have been listed, often as a joke or to
garner free publicity. In general, the company removes auctions that violate its terms of
service agreement

CHAPTER-III:
ANALYSIS
AND

INTERPRETATION
OF
DATA

DATA-INTERPRETATION AND ANALYSIS

Analysis of data is a process of inspecting, cleaning, transforming, and modelling data with
the goal of discovering useful information, suggesting conclusions, and supporting decisionmaking.
The following section gives comparative data analysis of the Indian ecommerce market and a
comparison between Flipkart, Amazon, Snapdeal, eBay.
Travel sector is leading the way in E-Commerce, with 1/3rd of all travel bookings are done
online. Travel industry in India is growing faster than other non-travel industries like Etailing, financial services, classifieds and other services:

http://www.mbaskool.com/business-articles/marketing/9146-online-tourism-is-india-lagging-behind.html

The above chart shows that ecommerce in India is most prevalent in the Travel Industry.
Also it shows the well-known fact that the ecommerce market in India has grown
significantly from December 2009 to December 2013.
India has an internet user base of about 250.2 million as of June 2014. The penetration of ecommerce is low compared to markets like the United States and the United Kingdom but is
growing at a much faster rate with a large number of new entrants.
So what does this user growth mean for E-commerce in India? Online travel and movie ticket
sales generate about $5 billion in revenue in India compared to a massive $80 billion in
neighbouring China.

The following pie chart shows distribution of ecommerce penetration in various sectors:

http://yourstory.com/2011/11/e-commerce-in-india-to-ride-the-wave-of-internet-growth/

Within the small percentage of people who buy online, the distribution is very one-sided.
Online travel services with a market share of about 76% dominate the Indian online purchase
space. This is followed by e-tailing with 8% share, financial services contributing 8%, digital
downloads comprising 2% and other online services having 6%.
There has been a shift in the usage of ecommerce by the Indian consumer. In 2010 the travel
industry occupied 80% of the Indian market and now this share has been reduced to 76%. The
Indian customers have now started considering using the internet for shopping of other
products as well which include e-tailing, financial services, etc.
Indias ecommerce market is estimated to have reached reached about $10-16 billion last
year, with an annual increase of 88% and analysts project that by 2020 it could be worth a
whopping $60-80 billion.

PRODUCTS SOLD IN THE INDIAN ECOMMERCE MARKET

Source: ASSOCHAM Report, December 20,2014

According to the ASSOCHAM (Associated Chambers of Commerce & Industry of India)

Report, December 20,2013 the products that are sold the most in the Indian ecommerce
market are Gift Articles followed by Books, Electronic Gadgets, Railway Tickets, Apparels
and others.
Internet penetration in India has been increasing exponentially in 2006 there were only 21
million active internet users, which rose to 243 million users by June 2014. Simultaneously,

the number of active mobile internet users grew to 185 million. The significant rise gave a
thrust to the e-commerce in India.
The growth of ecommerce in India has been considerable. It has attracted lot of foreign
investment in the Indian economy.
The table that follows shows the major happenings in the Indian ecommerce market over the
past decade i.e. from 2004 to 2014.

Indian ecommerce Timeline

YEAR
2004-07

HAPPENINGS

eBay acquired Baazee.com and entered the fledgling India market

Flipkart and Myntra were started around the same time

Flipkart pioneered the Cash on Delivery (CoD) model

Myntra expanded its catalogue to retail fashion and lifestyle

products

Flipkart acquired WeRead (a social book discovery tool)

SnapDeal acquired Grabbon.com ( a group buying site)

Flipkart acquired Mime360 (a digital platform company)

Flipkart acquired Chakpak.com (a Bollywood news site that

offered updates, news, photos and videos)

Flipkart acquired Letsbuy.com (that specialized in electronics) for

$25 million cash & stock transaction, rumoured to be facilitated
by the common investors Tiger Global and Accel Partners

2010

2011

2012

Flipkart launched Flyte Digital Music Store, later shut down in

2013 due to lack of expected traction

Fashionandyou acquired Urban Touch for $30 million cash &

stock transaction in a bid to consolidate

Indian Postal Service undertook a major IT project to modernize

its operations

Rocket Internet backed Jabong started operations in 2012

Myntra acquired the Sher Singh private label created by

Exclusively.in. SherSingh specialized in sports inspired lifestyle
apparel while Exclusively.in specialized in ethnic wear

Junglee was launched by Amazon.in as a price aggregator and

comparison tool.

Myntra acquired San Francisco based Fitiquette (virtual fitting

room)

Myntra piloted a one hour delivery system in Delhi & Bangalore

for delivery addresses located within a 5 kilometre radius of their
warehouse

Amazon, which does not provide Cash on Delivery facility in

another country across the world, started providing Cash on
Delivery option in India to keep up with the market norm

Flipkart launched its own payment gateway to third party

customers under the brand name PayZippy

Jabong launched its third party logistics firm JaVAS and later
sold it off to Gurgaon based QuickDel Logistics

Flipkart acquired Myntra for an undisclosed sum and shortly

thereafter revealed that they raised an additional $210 million led
by DST Global. This was followed by Flipkart raising another $1
billion at an enormous valuation of $7 billion

Flipkarts logistics arm eKart was thrown open to third party

2013

2014

retailers

Flipkart given a notice by the Enforcement Directorate for

potential violation of the FEMA norms while accepting FDI.
Potential penalty- INR 1400 crore

Myntra launched their private label Roadster with mega budget

campaigns run only for branded goods

SnapDeal acquired Doozton, a product discovery platform

Amazon tied up with BPCL in Mumbai and Delhi

Amazon tied up with Narayana Murthy through his private

investment firm Catamaran Ventures, to bring offline small sellers
and SMBs online

Amazon announces plans to invest $2 billion in building out the

Indian operations

The following graph shows the founding years and various popular ecommerce companies in
India and their products listed in millions of dollars:

http://yourstory.com/2014/08/indian-e-commerce-ecosystem/

As shown in the graph above eBay.com was the first to enter the Indian ecommerce market
followed by Flipkart.com and Myntra.com. A little later Snapdeal.com Jabong.com and
Amazon.com followed.
Also according to the graph the most products listed are by Amazon.com(around 15 million),
followed by Flipkart.com (around 10 million), Snapdeal.com (around 5 million.com) and
eBay.com (around 1 million ) and the others.
Flipkart, Amazon and Snapdeal, all of them have raised investments or
have commitments of $1 Billion or more. This money is being burned to
acquire new customers, offer discounts and pump up products on offer.

Looking at 10 Indian e-commerce sites based on the monthly traffic they generate using
Similarweb to find out the numbers for comparison. Here is the estimated monthly traffic of
each of the Top 10 players. [Stats have been taken for month of April 2014]

Expectedly, Flipkart topped the charts with over 62 million visits in the month of April with
Myntra coming shade lower at 59.5 million. Given that both of them have now come
together, purely based on the traffic, they clock more traffic than the rest 8 players combined.
While we expected either Amazon or Snapdeal to grab the 3rd place in terms of traffic,
Jabong took the bronze position with 42.5 mln visitors followed by Snapdeal (31.4 mln).
Amazon.in clocked a respectable 27.6 million visits in month of April (Remember, they have
not even completed a year since launch as yet). Also, if you combine Junglee, which is owned
by Amazon, their traffic bulges to close to 40 mln visits. eBay is at a fine position of 22.6
million estimated visitors per month.

We now head to the comparison between our two domestic players (Flipkart.com and
Snapdeal.com) and the most dominant international player (Amazon.com):

Source: Mail Today, Thursday, October 15,2014

The following graph shows the net revenue and loss comparison between Flipkart,
Snapdeal, Amazon for the year 2913-14:

[Data Source: Techcircle] Note: All figures are in INR Crore

Please note that the revenue figures in the grap are not the price of
products sold (GMV), as these are all marketplaces, and their revenues
come from commissions they get from sellers or listing fees that they
charge to list the products on their site.

GMV or Gross Merchandize Value represents the price of products sold and
net revenues are just a fraction of that!

Flipkart leads the race with net revenue of 179 crore followed by Amazon
at 168.9 crore and Snapdeal at 154.11 crore.

However, when it comes to losses, Flipkart leads by a much bigger margin

and their loss for 2013-14 stands at Rs. 400 Crore. Comparatively,
Amazon losses are pegged at Rs. 321.3 crore and Snapdeal had least
losses of 3 with 264.6 crore

The graph below shows how much loss each player incurs for every rupee in net
revenues:

Flipkart leads the race here to losing 2.23 rupees for every 1 rupee of
revenue. Amazon loses 1.90 and Snapdeal has least amount of losses at
Rs. 1.72.

Now comparing the two international players in the Indian commerce market:
A comparison of revenue growth and valuation multiples with eBay Inc. shed light on the
value investors see at Amazon.

Amazon is a clear winner on the measure of top line growth. However, eBay has been
growing at stable profit margins against Amazons sole focus on top line resulting in a more
stable earnings growth at eBay. We now take a look at the valuations the two companies
currently enjoy in the market. We prefer to evaluate the two companies on the price-toearnings (P/E) ratio on account of differences in their revenue reporting and recognition
policies, which impact the price-to-sales comparisons. The chart below displays the current
P/E multiples of the two companies.

Relative Valuation Comparison of Amazon & eBay

eBay

Amazon

LTM Earnings

2.18

0.59

Current Stock Price (Mar 07, 2014 closing price)

$59.3

$372.16

LTM Price Earnings ratio (P/E)

27.20

630.78

Amazon currently enjoys a premium valuation as compared to EBay, mainly on account of

faster top line growth; hence the importance of top line growth to an Amazon investor is far
more important as compared to top line growth for an EBay investor
A leading national daily recently showed the following comparison in the Diwali sales share
of the mostly used ecommerce portals in India:

Diwali Sales
Flipkart
eBay India
Amazon India
Snapdeal/Shopc
lues
Others

39%
23%
12.21
%
10%
15.79
%

Source: Mail Today, Monday, November 3, 2014

The above data has been represented in a pie chart below:

Diwali Shopping

Snapdeal/Shopclues; 17%

Flipkart; 45%
Amazon India and others; 22%

eBay India ; 16%

Source: Mail Today, Monday, November 3, 2014

Flipkart being one of the oldest and most recognized ecommerce companies in India has been
leading; Snapdeal started with deals, but quickly shifted to products and has been growing

rapidly and Amazon, which entered Indian market very recently, but with its global brand
Image has a great opportunity to grow and catch quickly. Although these three hold the major
share in the Indian ecommerce market eBay has also shown impressive growth.
According to a survey carried out by Akosha (a brand and customer management company)
ecommerce giant Flipkart emerged as the hot favourite of Diwali shoppers (2014) followed
by eBay India, HomeShop18, Amazon India, Snapdeal and Shopclues.
The survey had a sample size of 2000 respondents and insights from Akoshas own internal
database, the report said.
The three major parameters that influence the buying decision of customers online includePricing, Customer Service and Return Policy.

CHAPTER-IV:
CONCLUSIONS
AND
RECOMENDATIONS

CONCLUSION
From the comparative study of the four main players in the ecommerce market in India we
draw out the following conclusions:

Firstly ecommerce in India has only recently started growing to a considerably high
level. This new shift in the perspective of the Indian buyers has attracted lot of foreign
investment into the countrys economy.

The contribution of ecommerce in the countrys GDP is going to rise considerably in

the near future which makes investment in the ecommerce market absolutely
necessary.

Flipkart.com being one of the first ecommerce sites in India is still the most popular.
This is mainly due to the fact that they have been providing services as per the
requirement of the Indian buyers from the beginning.

The business model adopted by Flipkart.com is quite similar to that of Amazon.com

but modified for the Indian market which gives it an edge over its competitors.

eBay.com although being the first foreign company to enter the ecommerce market
has not gained as much popularity as the others in the market.

Snapdeal.com has now started gaining new consumer base but is still behind
Flipkart.com due to some lack in the services provided.

Snapdeal.com has also attracted investment from foreign giants recently. This shows a
positive growth in the market share that Snapdeal might acquire in the future.

Among the foreign players Amazon.com takes the no.1 spot. The brand image that
Amazon has made for itself in the international market has significantly helped it in
establishing itself in the Indian market.

Flipkart though enjoying the no.1 spot in the Indian market will soon be facing stiff
competition from Amazon.com and Snapdeal.com

Flipkart has been most successful among others also recently toping the chart for the
Diwali sales.

The Indian ecommerce market is to grow tremendously in the coming years with the
right amount of investment coming in.

The Indian customers have finally started trusting the portal of ecommerce rather than
just the traditional physical shopping.

All ecommerce companies are putting in effort to expand their base in the Indian
market looking at its potential.

RECOMENDATIONS
Need for different management of physical infrastructure
The business model of the conventional retailers and e-commerce providers differ
significantly. The conventional infrastructure model relies on increasing depth and breadth of
coverage through several inventory nodes, warehouses and stocking points connected by
based on various other factors ranging from production cycles, nature and variety of the
SKUs to even local taxation laws. The conventional order point occurs at retail stores and
static customer fronts located at the end of the chain, and inventory requirements are
predicted empirically based on several months or years of past data. In fact, competing sales
channels may also duplicate infrastructure, an indication of the typical sub-ordination of the
logistics function within the overall sales and distribution process.

The need to build infrastructure for increased agility

The key to success in e-commerce is an efficient last-mile network to ensure time-bound
delivery while maintaining agility in the logistics chain. The fundamental
SKU at the delivery point is a parcel, of varying shapes and sizes, while the pin-codes of
the operation become the determinant of the last-mile network model. The up-stream
infrastructure will then need to be built as a layer over this last-mile network with strategic
location choices of fulfilment centres proximal to
delivery modes. The operations will need to be tightly controlled in such a way that the
inventory stocks are converted to parcels and pushed down the chain efficiently, as well as
that the fulfilment centres are replenished. The balance between inventory and supply chain
costs is therefore a dynamic decision to be taken, considering both cost and service level
considerations. While the conventional logistics models have evolved in a way to expand
reach for businesses at the lowest cost in a
push model, e-commerce businesses will feel the need for greater agility in their supply
chain that will be more responsive to customer demands that are variable and less
predictable. The sheer variety of the product and destination choices and fulfilment modes
will mean that the provider cannot afford to stock the entire supply chain with sufficient
inventory to fulfil customer needs. The customer
order point will need to be pushed further upstream, from where pull from the customer is
recognised, tracked and met through rapid fulfilment methods.

Infrastructure will demand a large proportion of investment in

e-commerce
Active management of logistics, infrastructure and service levels is core to the ecommerce business in any market. E-retailers need to have a hybrid model of their own
captive logistics arm which takes care of their specific business model needs and strictly
monitored service level
agreements with 3PLs to rationalise the delivery costs.
The future competitors and winners in the e-retailing space will be the ones which will use
both bricks and clicks and not bricks or clicks alone.
This is evident from the evolving logistics and storage strategy of Amazon in the US.
Amazon has changed its logistics network from the
sell all, carry few, model to the sell all, carry more model and increased the number of
warehouses across the
US. This eventually proved beneficial for Amazon as the increased number of warehouses
led to both better reach and range for the suppliers and customers which eventually resulted
in faster service delivery and increased customer retention. Amazon is further investing 14
billion USD in increasing its warehouses base by 50 in the US.
Strictly monitored service level agreements with 3PLs which have developed the expertise
and skills to handle the vagaries of the customers in the e-commerce space has proven
beneficial for e-retailers as they are able to outsource the skills best suited to the 3PLs. A
successful example in terms of usage of SLAs with 3PLs is of eBay which has partnered
with couriers and allied service providers for the logistics with closely controlled SLAs

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http://yourstory.com/2011/11/e-commerce-in-india-to-ride-the-wave-of-internetgrowth/
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