Revisiting Indian Ecommerce Market [Report]

How big is the Indian ecommerce market? Is the valuation justified? These are questions often debated and Kotak’s Gamechanger has done a pretty good job of analyzing various aspects on how to value an ecommerce company.
The report explores and scrutinizes factors like market size, competitive intensity and positioning, capital availability and its willingness to price risk, and time horizons of investors.

10X increase in the number of Online Shoppers

The assumptions and forecasts assert that the number of online shoppers in India will go up by 8X to around 300 million from the current 38 million by FT2020E:

  • Stock of smart phones is expected to be 625 M, up from 225 mn currently,
  • Number of people online is expected to be 750 M, up 3X, and
  • Proportion of those online who will shop online is expected to increase to 45% from the current 20%.


Change in the shopping behavior- US $50 Billion

Then number of online shops, the items in an order and the number of times a customer shops in a year will increase and possibly be the basis of spectacular growth in Indian ecommerce.

  • The total value of goods ordered in 2015 is expected to be US $5.3B, which is anticipated to rise to US $44.3B in 2020 and US $86.1B by 2025.
  • The number of online shoppers in India is expected to rise from 37.7M in 2015 to 303M by 2020 and to 507.4M in 2025
  • The number of orders in a year is expected to rise from 4M in 2015 to 6.5M in 2020 and 9M by 2025.
  • The number of items in an order is anticipated to increase slightly from 1.4M in 2015 to 1.7 in 2025.

kotak 2Indian market- Think about it seriously (it’s worth it)

The Rupee estimate of the retail market in India examines the value of goods and services that can be purchased online as well as the proportion of it could come online. The online proportion of India’s retail market is expected to forecast an increase from 1.25% in 2015 to 7.16% in 2025.

  • The food and beverage sector online will showcase an increase from 55B in 2015 to 1,135B in 2025, followed by leisure sector from 196B in 2015 to 1,339B in 2025.

Estimating the market across the travel and non-travel space shows promising figures, an increase from US $13.3 B in 2015 to US $ 125.9B in 2025.

  •  Travel sector in digital commerce is accessed to increase from US $7.3B in 2015 to US $45.5 B by 2025.
  •  Non-travel sector is estimated to have an increase from US $ 6B in 2015 to US $80 B in 2015.

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The market in 2020 or 2015

In an expected winner-take-all market, the investing outcomes should also be expected to be binary (either a creation of massive value or a spectacular kaput; unless of course, till the end of the forecast horizon, the situation still remains muddy and muddled).
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A practical question- ‘How should an investor value an e-commerce company today?’

It is possibly the richest that will go on to become the fittest and hence survive. The valuation of the ‘winner’ is hence dependent on how kindly or otherwise the holders of capital are willing to look at it – and this hence allows for a wide range of values to be justified. The equity value of the leader is anticipated to rise from US $18.0 in 2015 to US $35.0 in 2025.
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  1. Here I think we are not counting those customers who have availed discounts. We also need to find out how long these markets can give large discounts.

  2. Fascinating study.
    It is instructive to note that current equity value for the most optimistic scenario (A) in 2025 still is a shade under valuations currently seen when a Snapdeal or Flipkart raises money. Will the tap run dry or do the mega funds know something more?

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