E-commerce Industry

Analysis
Presented by-
Saurabh Kumar Thakur- 24134
Shailvey Gupta - 24135
Shantam- 24136
Sharath Vijaykumar M- 24137
Indian e-commerce industry
analysis
• Market of $48 billion
• Expected to reach $200 billion by 2027
• Surpass US by 2034
• ARPU $224
• Investors, domestic and foreign, are excited about
the growing E-Commerce market.
• $7.6 billion investment from VC (2018)

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 Source: www.ibef.org

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 Source:www.ibef.org

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Reasons for the growth
• Rapid penetration of the internet and increasing mobile
usage(80%)
• Attractive offers and prices
• The increasing demand for aspirational and lifestyle
products by the growing middle class
• Lack of retail infrastructure in semi urban areas (wider
distribution)
• Growing digital literacy and comfort with transacting online
• More VC and FDI investments
• Growing trust building by the e-retailers(COD)

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 SWOT ANALYSIS
(STRENGTH)

• Cost effective - Elimination of long chain of middle man , decreasing need of having brick
infrastructure and outsource logistic are helping a small business to stand at par with
giants.
• Price/Product comparison - Provide platform to consumers to compare price and
product effectively and efficiently. It will tend to have far greater bargaining effectively
and efficiently.
• No time constraints - The concept of 24X7 shows that online trans can be used any where
any time as there is no time constraints
• Time saving - Transaction through internet is no doubt very fast. It saves time by reducing
physical movement.
• Fast Exchange of information - Guarantee fast and accurate sharing of information
among merchants and customers and enable quick just in time reply.
• Niche Market- Product of rare species are available without putting some special efforts
by consumer
• Faster buying procedure - The buying is just a click away from the seller. No physical
movement is required, no hunting of right product at right price is to done by the consumer
this make the buying process faster.

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 WEAKNESS

• Security : Security is a biggest challenge in to progress of e commerce. Customer always found themselves
insecure especially about the integrity of the payment process.
• Fake websites : Many fake websites are available on net which promises better service and secure dealing.
These web sites can not only disgrace ecommerce but also bring bad name to ecommerce.
• Fraud : Personal and financial details provided for trading purpose are misused by hackers their personal
undue interest.
• Impossibility of physical examination : Products whose choice is merely depend on its physical condition of
the product with need personal touch before selection are not suitable for e-commerce business. As Online
products cannot be touched, wear or sit on the products.
• Limited exposure: In developing areas where internet is not accessible will have no or little exposure to e
commerce.
• Customer’s satisfaction: There is no physical and personal or direct face to face interaction between
customer and the seller. Therefore the scope of convincing the customer does not exist.
• Long delivery timing: The task of Delivery is usually outsourced, who do not care about the timing of the
seller. Some time the delivery time may extend to days or weeks which one cannot wait for.

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 OPPORTUNITIES
• Changing trends : People are very brand conscious.. E- commerce is fast and effective even
financial transactions can be made from any part of the world. People of tomorrow will feel more
comfortable to buy products through internet only.
• Increasing number of user: Daily number of internet users is increasing. People feel more
comfortable to shop online.
• Global influences- Even if a company starts to work online with a local market , e-commerce
component gives it an ability to spread the activity around the global market.
• High availability (24 hour and seven days a week): Along with each and every click of the
mouse business is in operation. Those who are busy in day time and cannot spare time for them
self, have all the opportunity to shop as per their convenient time even during late night hours.
• Wide business growth: E business has wide scope and broader vision to grow. Business always
took place in gap. Gap filling is a never ending process hence the growth of business is also
never ending process.
• Advertising: Advertising is cost effective as compare to conventional offline system.

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 THREATS

• Competition – The low barriers allow easy entry into the market . This increases the
competition level and can cause reduction in price and profit margins.
• Changes in environment, law and regulations: Change in trends and fashion can
distress E Commerce side by side change in law and regulations can also affect it.
• Privacy concerns: Fears that information can be misused lead to spam e mail or
identity fraud.
• No direct interaction: In e commerce there is no direct interaction between customer
and the seller. There is no scope of bargaining. People prefer to buy physically as
compare to online to experience personal feel.
• Fraud: Persons using unfair means to operate ecommerce can damage the confidence
and faith of common people.

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Current Market Trends
Online retail sales in India are expected to grow by 31 per cent to US$ 32.70 billion in
2018, led by Flipkart, Amazon India and Paytm Mall.

What people buy on e-commerce sites?

Electronics is currently the biggest online retail sales category with a share of 48 per
cent, followed closely by apparel at 29 per cent.

Who is getting benefitted?

E-commerce became gateway for foreign brands to get a easy platform to sell there
products.
• More spending habits of millennials.
• Quality products seeking by working class people.

E-Commerce in India can be broadly categorized as:

• Domestic and cross-border
• B2B and B2C
• marketplace
• inventory based

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Strategies by foreign companies to enter Indian E-commerce market.
M&A
• Flipkart, after getting acquired by Walmart for US$ 16 billion, is expected to launch
more offline retail stores in India to promote private labels in segments such as fashion
and electronics.

• In September 2018, Flipkart acquired Israel based analytics start-up Upstream

Commerce that will help the firm to price and position its products in an efficient way.

• Launch of Paytm Payment Bank. Paytm bank is India's first bank with zero charges on
online transactions, no minimum balance requirement and free virtual debit card. It is
backed by Alibaba group.

• Google enters India's eCommerce Space with Google Shopping. Google and Tata Trust
have collaborated for the project ‘Internet Saathi’ to improve internet penetration among
rural women in India.

• Samara Capital-Amazon consortium will acquire Kumar Mangalam Birla’s Aditya Birla
Retail Ltd (ABRL) at an enterprise value of Rs 4,100- 4,200 crore. Samara Capital will
acquire 51% stake in that firm while Amazon will hold the balance 49% stakes.

• Yatra Acquired by US Software Firm Ebix Inc For Rs 2,314 Crore. Given the debt Yatra
holds, the eventual price of the deal is expected be in the range of Rs 1,653-1,722
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crore.
Government Initiatives:
• UPI
• Mobile banking
• E-wallet
• E-tender for B2B procurements

• The Government of India has distributed rewards worth around US$23.8 million to 1
million customers for embracing digital payments, under the Lucky Grahak Yojana and
Digi-Dhan Vyapar Yojana.
• The Government of India launched an e-commerce portal called TRIFED and an m-
commerce portal called ‘Tribes India’ which will enable 55,000 tribal artisans get access to
international markets.
• To increase the participation of foreign players in the e-commerce field, the Indian
Government hiked the limit of foreign direct investment (FDI) in the E-commerce
marketplace model for up to 100 per cent (in B2B models).
• The e-commerce industry been directly impacting the micro, small & medium enterprises
(MSME) in India by providing means of financing, technology and training and has a
favorable cascading effect on other industries as well.

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Clarification to the FDI policy:
Setting forth the definitions of e-commerce, e-commerce entities, market place-based
model and inventory-based model, the policy clarifies that 100 percent foreign direct
investment is permitted, under the automatic route, in marketplace models of e-
commerce and no FDI is permitted in inventory-based models of e-commerce. These
changes came into effect on February 1, 2019.

Equity Ownership:
The new guidelines bar online retailers from selling products of companies in which
they own stakes. The policy states that a business having equity participation or
control of its inventory by e-commerce marketplace entities will not be permitted to
sell its products on such marketplace entities’ online platforms.

Inventory Based :
The inventory of a vendor will be deemed to be controlled by the e-commerce
marketplace entity if more than 25 percent of vendor sales are from the marketplace
entity.

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eCommerce Intellectual Property Rights
•The Internet is borderless with minimum regulation, and therefore protecting
intellectual property rights (IPR) on Internet is a growing concern. There are
currently several significant IPR issues including misuse of trademark
rights. Other common issues with respect to IP in E-Commerce are:
• Copyrights
•Content creation through third party
•Use of third-party content on Website
•Hyperlinking, framing and meta tagging
•Domain names, business names, logos

Popular eCommerce Sites

• B2C: Flipkart, Myntra, Jabong, Amazon, Snapdeal, eBay, PayTM,
Shopclues, Pepperfry, Zomato, BigBasket, Alibaba
• B2B: Tolexo, Industrybuying, moglix, msupply, amazonbusiness

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Online Payment

Cash on Delivery quickly changed into Card on Delivery (COD).

Reasons-
• Cash transactions resulted in high administration costs for eCommerce companies which reduced
their margins.

Supporting mode-
• The launch of a Unified Payments Interface (UPI) by the Reserve Bank of India is expected to be a
game changer.
• Rupay card

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Mobile eCommerce
• Mobile eCommerce (m-
commerce) is growing rapidly as
a secure supplement to the
eCommerce industry.
• India has topped the U.S. to
become the second largest
market for smartphones after
China.
• The number of smartphone
users is expected to reach 650
• Industry leaders believe that million by 2019, 700 million by
m-commerce could 2020 and 829 million by 2021.
contribute up to 70 percent
of their total revenues.
Social Media
Major Buying Holidays
• Diwali festival (October or November of the year)
• Dussehra (October)
• Rakhi festival (August)
• Christmas (The last week of December)

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• The eCommerce sector has seen unprecedented growth in 2014, and is growing
since then.

• The growth was driven by rapid technology adoption led by the increasing use of
devices such as smartphones and tablets.

• The access to the internet through broadband, 3G, etc, which led to an increased
online consumer base.

• The Indian government’s ambitious Digital India project and the modernisation
of India Post will also affect the eCommerce sector.

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• eCommerce players see mobile commerce as the most preferred route with mobile
wallet as the preferred way of payment.

• With 4G services expected to be launched in 2015, internet penetration is likely to

take a significant leap, which is likely to give another boost to mobile commerce.

• Changes in lifestyle and shopping choices will see buyers preferring online and
mobile channel over physical channel to save time and seek wider range and
possibly comparative pricing.

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 1. Customer experience

2. Technological advancements

3. Convergence of online and off line channels

4. Delivery experience

5. Payments and transactions

6. Tax and regulatory environment

Top 10 things the E-
7. Operational framework
Commerce companies
8. Customer acquisition
need to do to
accelerate growth. 9. Digital infrastructure

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Investments across e-commerce
sector

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 Internet users and
Internet Penetration

7 Advanced
Technologies is
Empowering
Ecommerce
Business E-commerce Industry Analysis 24
1. Omni-Channel Presence/Support

2. Extensive Personalization

3. The Mobile Shift

4. Conversational Marketing

5. Automation and Chatbots for customer communications

6. Image search

7. Fast & Easy Checkout Processes

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Conclusion
• According to the PwC report Future of India - The Winning Leap, emergence of new technologies,
especially mobile, in India has sparked a social change that’s difficult to quantify.

• New technologies such as virtual walls and virtual mirrors will further help improve the retail
customer experience, thereby encouraging greater consumption.

• A key outcome of the technology revolution in India has been connectivity, which has fuelled
unprecedented access to information.

• Thanks to rising internet penetration, the gross number of online users in India now exceeds the
number of people who have completed primary education.

• This shift emphasises the increasing relevance of India’s digital economy.

• The eCommerce industry in India may currently be behind its counterparts in a number of developed
countries and even some emerging markets.

• However, with India’s GDP growth pegged at 6.4% by the International Monetary Fund and the
World Bank, it is expected to grow rapidly.

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Continued…

• What differentiates the Indian eCommerce market from that of a country like China is
that while market concentration in China is largely on account of Alibaba-owned
Taobao and Tmall (with these players holding a higher percentage of market share than
the top players in most of the other major markets), in India the market share is divided
amongst several ecommerce companies, each coming up with its own business model.

• As a result, customers have a wide range of products and services to choose from.

• In our view, there is humongous potential for eCommerce companies owing to the
growing internet user base and advancements in technology.

• However, this will not be without its share of challenges, be it operational, regulatory,
or digital.

• How a company prepares itself to meet these challenges will decide whether or not it
succeeds.

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