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E-Commerce Solutions

Analysis: 15 Future Indian eCommerce Giants?

The Indian eCommerce market is growing so rapidly it can prove baffling for outsiders. We attempt to shed some light on what is really going on.

Earlier this month, HomeShop18 filed for a $75 million IPO. This came as quite a surprise to many as the company is still a long way behind many of its larger Indian eCommerce counterparts. Yet this story highlighted the growing global interest in this sector, along with the exponential growth potential in the market.

Like the escalating volume of Indian consumers, the industry numbers are big. An Assocham survey from December 2013 showed that in 2012 Indian eCommerce was worth $8.5 million. In 2013 it was worth $16 million and by 2023 it is set to be worth $56 million.

A recent slideshare titled: “How is the E-Commerce industry in India shaping up?” by global VC Accel Partners proved India has everything in place to “display characteristics similar to China.” This is a mammoth opportunity emphasised by Chinese players like Alibaba, which is not only worth a ludicrous amount of money but enacts a phenomenal influence over the Chinese population.

Yet there are also obvious challenges for eCommerce in India. William Pearce, who moved from the UK to India to launch a series of online businesses for German giant Rocket Internet before jumping ship to start his own, explains some of the problems:

“I think fundamentally the winners in Indian eCommerce at the top end are going to be the guys with the deepest pockets. And Rocket has deep pockets but they’re not deep enough,” he continues. “There are a lot of set up costs and operating costs associated with servicing your audience – your logistics are expensive, your warehousing is expensive and the trouble is it is not going to get cheaper.”

This is part of the problem with the fast transitioning market. Pearce stresses: “The reason it is not going to get cheaper is that people flooding online over the next five years and they’re all going to start shopping online. And they’re all going to start shopping at the absolute bottom end of the product range.” This is both the challenge and the opportunity in India. It is the second largest country by population after China, yet it is extremely price sensitive and people like to haggle and touch before they buy.

“They’re reluctant, they need to establish their trust and so when someone spends 500 rupees (8 USD) on your site you lose money on it,” Pearce continues. “They have to shop three or four times before you make money and because there is so much competition they won’t do that because they’ll shop once on Jabong, once of Flipkart, once on SnapDeal…”

This means if you want to stay in the market “you’re committed to burning money for the next five years. And the more money you need, the more money you burn, in order to stay still. It will be like this right until the very end when the market matures and people start shopping for more expensive products online and marketing costs come down significantly. Then you’ll see people actually making money.  And that is when you’ll stop needing funding to run your business.”

Not surprisingly, international giants with a lot of capital are moving in to take their position on the massive Indian fruit machine. Amazon, for example, launched in India in June 2013, and immediately confers advantages. The constant shortage of core skills and consistent race for the lowest price means large organisations are easily able to cream off the best talent.

The State of eCommerce

Flipkart is by far and away the biggest player on the Indian eCommerce scene and owns about 50% of the market. Behind Flipkart are Snapdeal and Myntra (which make up about 25% each) and then after that are the other players, many of which fall into niches.

Sachin Bansal, CEO of Flipkart stated earlier this year that his company would be looking at acquisitions whenever an opportunity arose. And even before this there were near constant rumours about a potential deal with Myntra, which could further solidify Flipkart’s stake hold.

“Almost anyone who has shopped online in India has made at least one purchase with Flipkart,” says Pierce. “They’ve been around so long that they have a massive email list. If they want to they could get a lot of customers from that email list. They have a very good brand and that helps to bring their marketing costs down. [They are] in a very strong position but they’re still losing money. They raised 300 million USD and that is going to be enough to last them a couple of years.”

“It is the same story everywhere; Snapdeal is in an interesting position because they are a pure marketplace they don’t hold inventory, but they raised 130 million USD a couple of months ago and they’re going to need to raise the same again soon.”

“You’re talking about crazy amounts of money but also crazy potential. And the reason everyone is so excited is you look at China and that is a trillion dollar market, India has the potential to be the same so everyone is greedy I guess.”

Latif Nathani, Managing Director at eBay India stressed to The Hindu recently that whilst Indian eCommerce is nowhere near mature, “it is like any market that evolves. It has a lot of players coming in and then there is consolidation. Then again, players coming in have identified niches. We are seeing all that today. Companies identify a very narrow niche and are going into it as opposed to horizontals or say a marketplace.”

15 Big eCommerce Players

Due to the fragmented nature of eCommerce in India we have pulled together a quick list of some of the big potential players of the future that might be worth watching. Outside the top three, these are in no particular order and include comparison sites, niche players in areas such as optical wear and baby products, through big online bazaars that offer a little bit of everything. The aim of this is to help provide a quick snapshot of the space.

1) Flipkart

Headquartered in Bangalore, Flipkart was founded by Sachin Bansal and Binny Bansal in 2007. Initially focused on books, it later expanded into electronic goods and other products.

2) Myntra

Established by Mukesh Bansal, Ashutosh Lawania, and Vineet Saxena in February 2007, Myntra is an Indian online shopping retailer of fashion and lifestyle products, headquartered in Bangalore.

3) Snapdeal

Started in 2010 by Kunal Bahl and Rohit Bansal, Snapdeal is headquartered in New Delhi and offers an assortment of different products.

4) Jabong

The site was launched in 2012 through Rocket Internet and is one of India's leading fashion and lifestyle portals.

5) Yuvastyle

Yuvastyle retails online apparel and footwear sales with an extensive range of brands in fashion and lifestyle products.

6) OptrixStore

This is a niche website for all forms of glasses.

7) Shopbychoice

Large online retail shop for branded electronic items and gadgets.

8) ArihantDigi

The site stocks online photography products.

9) BazaarDelight

This website offers a vast range of products across a wide variety of categories.

10) Yapaa

Online portal dedicated to supplying baby products.

11) Infibeam

This provides a large variety of products across different categories.

12) BookMyShow

This is a site for booking cinema tickets which also features reviews.

13) Freecultr

This site offers a wide variety of merchandise and prides itself on good design.

14) Naaptol

Live since 2008, the site has grown into a large comparison-based social shopping portal.

15) First Cry

Established 2010, this offers a wide range of branded baby products.

 

Kathryn Cave is Editor at IDG Connect

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