The Evolving Indian eCommerce Competitive Landscape And It’s Changing Faces.

E-retailing in India is booming at a great pace with the current market value being $2.3 Billion which has grown from the $600 million two year ago. It is expected to reach$32 Billion by the year 2020. Almost 50% of people who consume e-retail are from small town while the rest 50% is from the 8 major metros. This clearly denotes that eCommerce is skipping the evolution of one generation of retail in the country.

The major players in the Indian eCommerce industry are Flipkart, Snapdeal and Amazon. The three are competing not for profit but to own the major part of the revenue pie. Between the war of these clans, there have been major acquisitions, mergers and pivoting. Flipkart has acquired Myntra, while Tradus and Yebhi have pivoted their business models.

Tradus is now a fresh food and grocery e-tailer, while Yebhi is an aggregation website for fashion products listed on other sites. The various e-retailing portals can be classified according to their business model below.

Take a look at graph below that demonstrates the competitive landscape in Indian eCommerce market.

Indian Ecommerce : Changing Landscape
Indian Ecommerce : Changing Landscape

Players shown in the second quadrant (top left) are purely marketplace portals who provide a platform for sellers and buyers while Amazon, eBay, Flipkart, Infibeam, Indiatimes and HomeShop18 have a hybrid model where they allow merchants to list products like marketplace and also keep their own products from the inventory. Futurebazaar is the only player in the first quadrant that has a mass category inventory model.

Players in the fourth quadrant (lower right) are niche category products in the lifestyle segment such as jewellery, apparel and home décor which are high margin categories. The main players in the lower right quadrant that maintain their own inventory are Myntra and Jabong (apparel), CaratLane (jewellery), UrbanLadder (furniture),  and FirstCry (baby and kids products). These businesses source from the highest level in the value chain (manufactures and distributors) and fulfill the orders from their own warehouses.

Third quadrant has niche category players. This is a new emerging class of players in the eCommerce sector. Most of the players in this sector receive sales from foreign countries as they are focused on ethnic products and such.  Interestingly, although the players in this segment are smaller and lesser known in comparison to the mass category marketplaces like Flipkart, many are actually profitable due to the world-wide customer focus.

As the competition stiffens even more, only players who can differentiate themselves from others will remain in the market. One way to sustain is to focus on niche categories like Tradus did while other is to provide value to customers through better user experience. Limeroad and Xarato* are two such examples, the latter having introduced social shopping powered by Facebook. Think of Xarato as eBay meeting Pinterest, which sets the benchmark for the next generation of marketplaces with social baked in from the start. Ultimately, user engagement will be key and will determine the success of the various players. The Indian e-retailing industry is all set for even more exciting times.

[*Guest article contributed by Indrashis Ghosh, Head of Marketing at xarato.com, India’s Social Shopping Marketplace. The Bangalore based startup is currently actively seeking early-stage funding.]

Recommended Read : Evolution of India Ecommerce Industry : As Told Through TV Commercials

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