What e-commerce in India looks like [Recap 2012]

This year was a meaningful one for ecommerce in India. From the launch of Amazon’s Junglee.com to the acquisition of Letsbuy by Flipkart, the year 2012 saw consolidation, acquisition, policy changes, behavioral shift and a profound change in the e-commerce business model. There is a also a visible shift from the inventory model to the market place model in e-commerce business. We take a look at some of the events that defined the e-commerce industry last year.

MarketsizeEcommerce revenue 2008-15 IAMAI - Avendus 1
The eCommerce industry in India has seen a multifold increase in the past three years, with the total market size increasing from Rs 19,688 crore by the end of 2009 to an estimated Rs 28,500 Crore ($6.3 billion) in 2011 and Rs. 76,300 crore ($14 billion) in 2012.

Online travel constitutes a sizeable portion (87%) of this market today.  Globally, online travel constitutes a much smaller portion of the overall e-commerce pie – in the US, online travel contributes 37% of total e-commerce revenues.

Asian markets, especially China and Japan have been even lower (less than 20% in both these countries) in terms of online travel’s contribution to e-commerce. [Source IAMAI and Avendus]  Below is the infographic highlighting growth/projection of total online consumer revenue.

E-tailing market has become already larger than most projections, the segment reportedly grew around 80% in 2011 and  139% in 2012. Based on Technopak report, the e-tailing market will grow to Rs 73,575 Crore ($13.5 billion) in 2017.
ecommerce market segmentation between OTA  and  etail
The number of Indian online shoppers is currently estimated at 14% of the total Internet users; and is expected to increase at a rate of 35% over the next 4 years. At these growth rates, the number of online shoppers is likely to reach 38 million by 2015. This growth is expected to drive the overall growth of the e-commerce space in India, with revenue per online shopper also increasing at a similar pace.

The Indian ecommerce market to also evolve towards higher contribution from e-tailing in coming years. E-tailing will catch up with online travel by 2015, with each of them contributing approximately $12 billion to the total ecommerce market in that year.
(source Avendus)

Investment in eCommerce

ecommerce investment in past 3 years
Source: Allegro Capital

Fifty two eCommerce companies have raised close to $700 million venture capital over the past 3 years and out of them, only 30 % could raise the next round of funds, according to a new report.

Out of the 52 companies which managed to raise nearly $185 million in series A, 16 firms went on to raise $210 million in series B and and 7 companies went on to raise $300 million in further rounds taking the total to about $695 million, according to a study conducted by Bangalore based Allegro Capital Advisor. The investment figure includes Flipkart’s $150 million funding and excludes angel and individual funding into the sector.

10  multi category retailers have garnered $355 million and  $200 million has been invested into 21 apparel and accessories sites. In baby product category, as of now $30 million has been invested across 5 firms and $40 million has been raised by private labels so far. Infographic representing investment across different categories:

Some big deals in 2012

– Flipkart raised $150mn at a valuation of $850mn from existing investors, i.e. Accel Partners and Tiger Global Management.

– Myntra raised $20 million series C round led by Tiger Global.

– Manmohan Aggarwal led Yebhi had raised $20 million Series C funding led by Fidelity Growth Partners India (FGPI) and Qualcomm Ventures (QV).

Major Acquisitions [Forced or need?]

  • India’s largest e-commerce player in physical products – Flipkart acquired Letsbuy, the second largest retailer in electronics. With this move, Bangalore based firm firmly established itself as the leader in the consumer electronic space.
  • Healthkart had acquired Madeinhealth, one of its biggest rival for an undisclosed amount. Madeinhealth.com was founded in early 2011 by Maniraj Singh Juneja and Jatin Modi.
  • TravelGuru which was acquired by Travelocity in 2009 once again acquired by Yatra in May this year.Travelguru was funded by Sequoia Capital and Battery Ventures with infused funds of $25 mn ($10mn in the first round by Sequoia, $15mn from Sequoia and Battery Ventures combined).
  • FashionAndYou  acquired UrbanTouch for $30mn (in cash and stock). FashionAndYou has raised $48mn+ in total funding so far with the last round led by Norwest Venture Partners and Intel Capital.
  • Online retailer Myntra.com  acquired SherSingh, the private label online brand specializing in sports-inspired lifestyle apparel for men and women.

Government policies impacting Indian eCommerce space

  • Indian government approved 100% FDI in single brand retail with a rider that for proposals involving FDI beyond 51 per cent, the mandatory sourcing of at least 30 per cent would have to be done from the domestic small and cottage industries which have a maximum investment in plant and machinery of USD 1 million (about Rs 5 crore).

Developments

[This article is part of our 2012 Recap series, and is supported by CCAvenue.]

2012 Recap/ 2013 Trends
CCAvenue is India’s largest payment gateway solution powering thousands of eMerchants with real time, multi-currency, multiple payment options online payment processing services. The solution is powered by proprietary technology that integrates transaction-processing, advance shopping cart, auction payment collection facility, mobile page, risk assessment and fraud control, smart analytical dashboards, financial reporting and order tracking and many more features.

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