India had its first brush with the online E-Commerce with IRCTC (Online Passenger Reservation System) but eventually, it got popular with the launch of deep discount model of Flipkart. Soon other portals like Snapdeal, Flipkart owned Myntra and Jabong, and Amazon started venturing deep into the goldmine of e-commerce market in India.

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E-commerce industry – a brief outlook
India had its first brush with the online E-Commerce with IRCTC (Online Passenger
Reservation System) but eventually, it got popular with the launch of deep discount model
of Flipkart. Soon other portals like Snapdeal, Flipkart owned Myntra and Jabong, and
Amazon started venturing deep into the goldmine of e-commerce market in India.
Now in 2016, driven by a young demographic profile, increasing internet penetration and
relative better standard of living, India's present E-Commerce revenue stands around a
whooping $35 billion. eTailing India says, “The e-commerce market would grow to US$120
billion by 2020.”
In terms of growth, India’s annual expansion of 51% is the fastest in the globe, much than its
Asian neighbors like China’s 18%, Japan’s 11% according to a joint study by ASSOCHAM-
Forrester. "We were growing at 3-4 times the rate (the overall) landscape was growing. So
we exited 2015 with a very high bar for growth in 2016," said Amazon India Managing
Director Amit Agarwal.

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Changing growth metrics
E-commerce industry could be compared to as fractals that starts out simple and gets
progressively more complex.
E-commerce majors have long ignored metrics of unit economics which is the calculation of
revenues (for example, LTV or Lifetime Value from a single customer account) and have
stressed on Gross Merchandise Value(GMV) which measures the value of products sold on
the site excluding sales returns and discounts have resulted to huge losses.
A few e-commerce businesses have started realising the importance of profitability,
sustainable growth and consolidation instead of relying on overvaluation, vague metrics or
me-too strategy. And, they seem to be taking significant steps in this direction.
⦁ Flipkart and Snapdeal are replacing their inventory model with a marketplace. They have
started talking the language of Net Promoter Scores (NPS), which is the measure of
customer loyalty.
⦁ Ola will soon start leasing self-owned cars to drivers instead of hiring drivers who owned
cars.

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⦁ Foodtech startups such as Tiny Owl and Zomato are laying off staff or shutting down in
some cities to reduce operational costs.
⦁ Additionally, government incentives and regulations (FDI) will also push the e-commerce
sector towards equilibrium.
⦁ “Everyone at Flipkart now has net promoter score (NPS, a key measure of customer
satisfaction and loyalty) and customer satisfaction as their most important metrics,” says
Binny Bansal, CEO of Flipkart.
Opportunities
⦁ Bringing experiential marketing into the mind of customers, ecommerce entities can
leverage omni-channel strategies of their products. Great customer-experience remains the
key to achieve Customer Lifetime Value (CLV).
⦁ Investments in bringing values added services to the large base of merchants can be
extremely gainful for e-commerce entities.
⦁ Merchants usually don’t have a point of sale system. Digitising them with introduction of
marketing and cataloguing services, mobile banking and auto management will make the
whole process of supply chain management smoother.
⦁ Tapping the huge unstructured market in Tier II and III cities gives you access to a larger
pie of the market. Shopclues co-founder Radhika Aggarwal said, "We treat our five lakh
merchants as five lakh warehouses so our capital expenditure is very low."
eTailing India adds that with the expansion of logistics, around 50% of
E-commerce business comes from these cities.
Funding
⦁ Incursion of Global investment in China’s leading ecommerce companies has been slow
and it is India that offers a huge portfolio for investments especially in retail and e-

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commerce segment. With the present relaxation of FDI norms, the scope of VC’s investment
has widened with a huge array of prospective bets on startups.
⦁ The capital cycles are expected to shrink, where the venture capitalists will be interested in
a lesser number of deals and smaller rounds. Series A funding, which earlier used to be in
the range of US$5-10 million could now be in the range of US$2 million. Whereas, Series B
will see investment in the bracket of US$5-10 million and Series C funding will come with
stringent conditions and expectations.
SoftBank chief executive Masayoshi Son said, “We have already invested $2 billion and we
are interested in investing more. India has a great future. We are interested in investing in
Internet companies.”
On the mega investments, Shailendra Singh, managing director of Sequoia India said, “The
number of Indian companies raising more than $50 million-$100 million has risen
exponentially in the past two years but when a glut of capital turns up, companies develop
bad habits, they use balance sheets as a source of competitive strength.”
Niche Players
Niche e-commerce or vertical e-commerce specifically deals with a specific product line with
a large gamut of choices.
⦁ The classified buying/selling sites like Quickr, Ola and now launch of Amazon’s Junglee
will be jostling in the peer-to-peer commerce market in India.
⦁ Amarjit Singh Batra, CEO, OLX India says, ““It’s interesting to see both stocking and
selling figures rising. The emergence of consumer-to-consumer (C2C) online classifieds in
the country has led to greater awareness about used goods” adding Indian homes have a
stockpile of unused goods worth $11.7bn.
⦁ Then there are digital healthcare startups such as Goqii Inc., eKincare and Practo. The
rural India is set to emerge as a potential demand source for -healthcare services and these
startups can help for the same.
⦁ Fashion retail is equally compelling with players like Myntra and Yepme coming out with
new strategies to exploit $70 billion of fashion retail business.

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⦁ India's jewellery market is worth more than $50 billion and jewellery e-commerce
segment has Caratlane and Bluestone, the two leaders in jewelry e-commerce in India.
eTailing India quoted, “In e-commerce, especially fashion, you have big margins and that
makes up for your logistics costs because in India nobody wants to pay for delivery.”
Along with the launch of GST Bill, E-commerce industry will experience more upheavals
and consolidations in the coming time.
I would really love your thoughts and opinions on this subject.