E‐tailing Market in IndiaOctober 2012
Executive Summary                The Indian e‐commerce market is growing at a CAGR of a1% and can broadly be categorized ...
•Introduction•Market Overview•E‐tailing Formats•Benefits •Suitable Product Categories•Drivers & Challenges•Government Regu...
Availability of products coupled with ease of selection have led to the proliferation of e‐tailing  in IndiaE−tailing Mark...
E‐tailing Formats (1/4)                                                F1                • Xx               • Xx     Busin...
E‐tailing – Suitable Product Categories                                                                                  B...
Drivers & Challenges – Summary    Drivers                                                     Challenges  Increase in inte...
As internet reach ramifies into remote spaces, e‐tailing derives growth from it   Increase in internet users              ...
Impact of FDI cap on e‐tailing firms     Category            Example                             Impact          A        ...
Trends – Summary               Consolidation seen as a trend              Private labels going e‐tailing way          ` Ke...
Kids’ e‐tailing is fast growing as a major category that is deemed to be having great potentialEmergence of kids’ e‐tailin...
Investments in the E‐tail Sector  Year   Buyer          Target                               Deal Size (INR )   Type of Tr...
Private: Domestic Company – Company 1 (1/3)Company Information                                                Offices and ...
Private: Domestic Company – Company 1 (2/3)Financial Snapshot                                                           Ke...
Private: Domestic Company – Company 1 (3/3)Business HighlightsDescription           News                      • Has earned...
SWOT Analysis – Company 1               STRENGTH                                          WEAKNESS   • Xx                 ...
Thank you for the attentionThe E‐tailing Market – India 2012 report is a part of Netscribes, Inc.’s Information Technology...
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Market Research Report : Indian e-tailers market in India 2012

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Online shopping has caught the fancy of the common people in a phenomenal way in recent years. As the significant changes in modern lifestyles are leading people to become increasingly hard pressed for time, they are constantly on the lookout for quicker alternatives for practically every kind of activity and shopping online has earmarked a new trend in this time-saving effort. Indian retail has been quick to capitalize on this new concept, thereby heralding a new era of e-tailing. Although e-commerce has been prominent in the online domain for quite some time now, yet it is different from e-tailing in the sense that while the former includes sale of goods and services, the latter pertains to only goods. Despite certain prevalent inhibitions regarding the prospects of e-tailing in the country, this form of shopping has suddenly received a new lease of life and is well on its way towards further growth due to the increasing internet and credit card penetration and general tendency among consumers to explore new avenues of shopping.

The report begins with an introduction of the retail market in India primarily because e-tailing is an online variant of retailing. This is followed by the introduction of the parent industry for e-tailing which is the e-commerce sector. A brief introduction is provided on the e-commerce sector along with the market size and growth as well as market segmentation. The focus then shifts to e-tailing deliberating on the concept, followed by its evolution and a trade-off between physical retailing and e-tailing, elaborating on the advantages associated with the online variant. The report then focuses on the e-tailing market in India detailing about its market size and growth. A brief snapshot of the sector is also provided with this overview that is immediately followed by a segmentation of the e-tailing market. The section concludes with a value chain analysis of the sector. The report then proceeds to give a briefing about the e-tailing formats that are present in the sector. A section on the benefits associated with e-tailing comes next that precedes the 4P’s of marketing for the sector and the key success factors. The following section speaks about the product categories that find maximum off-take in this sector.

Brief descriptions of the drivers that help the sector to prosper include increase in internet users, boost from social media, changing demographics, increase of internet-enabled computing devices, soaring real estate costs and the need to save time. A considerable proportion of the growth of the sector depends on the growth of the internet user base. As internet users increase with the passage of time, activities such as e-tailing that depend on net connectivity also derive their growth from the same. Social media has helped the sector to grow in the sense that it acts as an effective marketing vehicle

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Market Research Report : Indian e-tailers market in India 2012

  1. 1. E‐tailing Market in IndiaOctober 2012
  2. 2. Executive Summary  The Indian e‐commerce market is growing at a CAGR of a1% and can broadly be categorized into  a2 and a3 Market  The e‐tailing sector is a subset of the e‐commerce market and is deemed to be growing at a CAGR  of a4%  Huge growth registered by e‐tailing concerns in terns of VC investments hint at the growth  potential of the sector Drivers Challenges – Internet penetration – Negative consumer perspective  – Boost from social media related to cyber security Drivers &  – Changing demographics Challenges – High cost of customer acquisition – Increase of internet enabled computing  devices – Issue of reverse logistics – Soaring real estate costs – Lack of touch and feel element – Need to save time  Consolidation seen as a trend  Private labels going e‐tailing way Trends   Cash on delivery as a payment option  Introduction of brand stores  Emergence of kids’ e‐tailing Major PlayersCompetition Flipkart Jasper Infotech Myntra NSI Infinium TV 18 Home Shopping Xerion Retail E‐TAILING MARKET IN INDIA 2012.PPT 2
  3. 3. •Introduction•Market Overview•E‐tailing Formats•Benefits •Suitable Product Categories•Drivers & Challenges•Government Regulations•Trends•Mergers & Acquisitions•Major Players•Strategic Recommendation•Appendix E‐TAILING MARKET IN INDIA 2012.PPT 3
  4. 4. Availability of products coupled with ease of selection have led to the proliferation of e‐tailing  in IndiaE−tailing Market – Overview   • The need to save time by urban India and the plethora of options and choices offered by online stores have  been deemed as the chief drivers for the growth of e−tailing market in India • The growth and optimism in this arena has resulted in the spurt of private equity investments in online and e  −commerce ventures in the market • As the burgeoning internet penetration continues aided with flexible payment modes, physical retail  majors  are also treading the lines of setting up online stores • Trends suggest that metros are not the only area of operation for the players, tier I and II cities are also fast  catching up owing to their evolved brand consciousness and lack of availability of products in their vicinity   E‐tailing Market – Growth in India Online Shoppers – Growth in India  INR bn mn 0 0 2010 2011 2012e 2013e 2014e 2015e 2011 2012e 2013e 2014e 2015e 2016e E‐TAILING MARKET IN INDIA 2012.PPT 4
  5. 5. E‐tailing Formats (1/4) F1  • Xx • Xx  Business Model & Target Segment Scalability   • xxxx • xxx Strengths   Challenges  • xxx • xxx E‐TAILING MARKET IN INDIA 2012.PPT 5
  6. 6. E‐tailing – Suitable Product Categories B1  High 4 3 B2  B3  B4   B5  Value  B6  B7   1 2 B8   B9   B10    B11    B12   Low  B13   B14   Low  High B15   Supply Chain Complexity B16  • Xx• Xx xxxxx• Xx E‐TAILING MARKET IN INDIA 2012.PPT 6
  7. 7. Drivers & Challenges – Summary   Drivers Challenges Increase in internet users Negative consumer perspective  related to cyber security Boost from social media High cost of customer acquisition Changing demographics Issue of reverse logistics Increase of internet enabled  computing devices Lack of touch and feel element Soaring real estate costs Need to save time E‐TAILING MARKET IN INDIA 2012.PPT 7
  8. 8. As internet reach ramifies into remote spaces, e‐tailing derives growth from it   Increase in internet users Impact• The ever increasing figure of internet users in India is considered to be one of the key drivers for  this market• The introduction of internet as an alternative channel for shopping has changed the consumers’ decision making process inadvertently• Internet has aided the consumers to frequent the retail websites more often not only for  deriving product information but also for making the final purchase• Advent of internet has brought the ambit of retail products within the purview of consumers at  their fingertips• Today, consumers can browse through different products, seek their information and make  purchases sitting at their convenient places without requiring to go to a physical store  Total Internet Subscribers – India Number of Broadband Subscribers – India As of Jul 2012, India had ‐ mn internet users mn mn 0 0 2011 2012e 2013e 2014e 2015e 2010 2011 2012e 2013e 2014e 2015e Rural Subscribers Urban Subscribers E‐TAILING MARKET IN INDIA 2012.PPT 8
  9. 9. Impact of FDI cap on e‐tailing firms Category  Example  Impact  A  a1 a2 B  b1 a3  C  c1 a4 d1 a5 D  E  e1 a6 E‐TAILING MARKET IN INDIA 2012.PPT 9
  10. 10. Trends – Summary  Consolidation seen as a trend Private labels going e‐tailing way ` Key Trends Cash on delivery as a payment option Introduction of brand stores Emergence of kids’ e‐tailing E‐TAILING MARKET IN INDIA 2012.PPT 10
  11. 11. Kids’ e‐tailing is fast growing as a major category that is deemed to be having great potentialEmergence of kids’ e‐tailing E‐tailing sites specifically targeting kids’ products have mushroomed in the Indian online domain over the last year and has emerged as a  latest trend that is shaping the e‐tailing sector in the country Baby Products – Purchase (2011)   • The opportunity for children’s products including apparel,  footwear, toys, bathing products have been on the anvil for a  p Online considerable period of time Offline • However, with the advent of specialty retail formats, the  sector has seen major breakthroughs • Lack of presence of physical retail stores selling kids’ products  in majority of areas have translated into a huge opportunity  generation for e‐tailing sites selling such products q INR bn c1 c6  c2 c7 c3 c8 0 c4 c9 2010 2011 2012e 2013e 2014e 2015e c5 c10 Kids’ E‐tailing – Market Size & Growth E‐TAILING MARKET IN INDIA 2012.PPT 11
  12. 12. Investments in the E‐tail Sector Year Buyer Target Deal Size (INR ) Type of Transaction x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x E‐TAILING MARKET IN INDIA 2012.PPT 12
  13. 13. Private: Domestic Company – Company 1 (1/3)Company Information Offices and Centres – India Corporate AddressTel No. Place WebsiteYear of Incorporation Head OfficeProducts and ServicesCategory Products/ServicesRetail  Key People Name Designation Note: The list of products and services is not exhaustive E‐TAILING MARKET IN INDIA 2012.PPT 13
  14. 14. Private: Domestic Company – Company 1 (2/3)Financial Snapshot Key Ratios Total Income Net Profit/Loss y‐o‐y change  Particulars  2011 2010 2009 (2011‐10) INR mn Profitability Ratios INR mn 0 Operating Margin ‐46.77 ‐53.63% ‐6.86% N.A. Net Margin ‐47.99 ‐55.73% ‐7.74% N.A. Profit Before Tax Margin ‐46.77 ‐53.63% ‐6.86% N.A. Return on Equity ‐15.08 ‐16.79% ‐1.70% ‐137.85% Return on Capital Employed ‐15.49 ‐17.04% ‐1.55% 0.00% Return on Working Capital ‐18.88 ‐21.06% ‐2.18% ‐23.79% Return on Assets ‐15.08 ‐16.79% ‐1.70% ‐11.63% Return on Fixed Assets ‐448.79 ‐643.83% ‐195.04% ‐47.02% 0 Cost Ratios 2009 2010 2011 Operating costs (% of Sales) 46.77 153.63% 106.86% N.A. Administration costs (% of  N.A. N.A. N.A. N.A. Sales)Financial Summary  Interest costs (% of Sales) N.A. N.A. N.A. N.A.• The company incurred a net loss of INR 240.1 mn in FY 2011,  Liquidity Ratios as compared to net loss of INR 8.9 mn in FY 2010 Current Ratio ‐48.21% 16.29 31.45 13.03 Cash Ratio ‐61.16% 14.35 36.95 0.00• The company reported total income of INR 430.9 mn in FY  Leverage Ratios 2011, as compared to INR 116.1 mn in FY 2010 Debt to Equity Ratio N.A. N.A. N.A. 10.85• The company earned an operating margin of ‐53.63% in FY  Debt to Capital Ratio N.A. N.A. N.A. 0.92 2011 a decrease of 46.77 percentage points over FY 2010 Interest Coverage Ratio N.A. N.A. N.A. N.A. Efficiency Ratios Fixed Asset Turnover ‐54.14% 11.55 25.19 0.00 Asset Turnover 36.82% 0.30 0.22 0.00 Current Asset Turnover 29.95% 0.35 0.27 0.00 Working Capital Turnover 34.05% 0.38 0.28 0.00 Capital Employed Turnover 36.82% 0.30 0.22 0.00 Improved Decline E‐TAILING MARKET IN INDIA 2012.PPT 14
  15. 15. Private: Domestic Company – Company 1 (3/3)Business HighlightsDescription  News • Has earned its name as one of the leading e‐commerce players in India boasting of over ‐ mn book titles and ‐ different categories  • It has more than ‐ mn registered users and sale of ‐ items per day • It has its footprint in ‐ cities and is looking at expanding its reach in near future Overview • It hit a new milestone by clocking INR ‐ bn in gross merchandise value shipped in a month  for the first time in ‐ • The number of daily orders has also hit ‐ or ‐ orders per minute which represents a five‐ fold rise after the company clocked ‐ orders a day for the first time in ‐Acquisition  • It has announced about its acquisition of local company xx for an undisclosed sum in ‐ • Has secured its finances for the coming ‐ years after it raised INR ‐ bn from new investors  namely xx and xx along with the existing ones in xx and xxFunding  ‐, the founders of the company earlier controlled about ‐% of ‐ equity, while the xx and xx together  controlled ‐% and the management held the remaining ‐% E‐TAILING MARKET IN INDIA 2012.PPT 15
  16. 16. SWOT Analysis – Company 1  STRENGTH WEAKNESS • Xx • Xx • Xx  • Xx  SWOT OPPORTUNITY THREAT • Xx • Xx • Xx    • Xx  E‐TAILING MARKET IN INDIA 2012.PPT 16
  17. 17. Thank you for the attentionThe E‐tailing Market – India 2012 report is a part of Netscribes, Inc.’s Information Technology Industry Series.For more detailed information or customized research requirements please contact:Phone: +91 33 4027 6214/6215E‐Mail: sales@netscribes.comFollow us on:About Netscribes, Inc.Netscribes, Inc.  is a knowledge‐consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content‐management services, and knowledge‐software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes Inc. is a one‐stop shop designed to fulfil clients’profitability and growth objectives.Disclaimer: This report is published for general information only. Although high standards have been used in the preparation, “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes and prior permission is required for guidelines on reproduction. E‐TAILING MARKET IN INDIA 2012.PPT 17

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