Indian e-retail growth and entrepreneurship

International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459 (Online), Volume 4, Special Issue 1, February 2014)
International Conference on Advanced Developments in Engineering and Technology (ICADET-14), INDIA.
Lord Krishna College of Engineering (An ISO 9001:2008 Certified Institute) Ghaziabad, Uttar Pradesh, INDIA. Page 79
"Sharpening Skills.....
Serving Nation"
Entrepreneurship in India: The Case of e-Tailing Ventures
Ranjana Agarwal
Department of Applied Sciences, Lord Krishna College of Engineering, Ghaziabad, India,
deviranjana64@gmail.com.
Abstract—This paper aims to build a picture of the
current scenario of the changes driven by the Indian
entrepreneurs in e retail taking place in India. Last few
years have seen unprecedented growth of the
entrepreneurial ventures in the ecommerce sector in the
country some of whom have shut down while few others have
emerged as the leaders of the industry. In the current $500
billion retail sector, the online segment's contribution is less
than 0.50%, which signals a further huge growth in this
segment and calls for a structures understanding of current
scenario in the e-retail space in India. With lot of foreign
ventures and global giants like Amazon entering the Indian
e-retail space, it is important to look at the Indian
entrepreneurial ventures. Through the analysis of report
from the company disclosures, news articles, media
coverage, analysts’ reports and other related articles in
public domain, this paper is a first little step in analysing the
current state of Indian e-retail companies, their current sales
figures profits (or losses) and other related parameters such
as Facebook likes etc. This paper also looks upon the
antecedents of online buying behaviour of the Indian
consumers which would be useful for the upcoming
entrepreneurs to appropriately devise their strategy to
sustain in the Indian e-retail space
Index Terms— e-retail, hedonic factors, utilitarian factors
I. INTRODUCTION
With the recent growth of internet based
entrepreneurial ventures, India is poised to become a retail
power house. This paper looks at the changing scene in the
e-retail sector in view of many MNCs (Amazon, Tradus
etc.), large foreign venture capitalists, investors and
Indian entrepreneurs entering into this segment. India is
one of the top retailing markets in the world and among
the fastest growing. Coupled with that is its online
penetration, which is nearly 60% now, according to a
research report by Comscore for Assocham-State of
e-commerce in India (Mint, 2013a). For the third
(consecutive) year, India tops [...] as one of the most
attractive countries for global retailers [...] Modern
retail, accounting for 2-3 percent of the market, is
expected to grow at a compounded annual growth rate
(CAGR) of 40 percent, from $8 bn. to $22 bn. by 2010.
Overall India’s retail sector is expected to grow from
its current $350 bn. To $427 bn. by 2010 and $635 bn. by
2015 (Moriertyet al., 2007, p. 9) Meuter et al. (2000) have
defined e-retailing in terms of the internet market as, “a
virtual realm where products and services exist as digital
information and can be delivered through
information-based channels”. Bakos (1991), describes an
e-market as “... an inter-organisational information system
that allows the participating buyers and sellers to
exchange information about prices and product offerings”.
Liu and Arnett (2000), define it as, “a way of conducting
business by companies and customers performing
electronic transactions through computer networks”. This
e-retailing may be define as use of an electronic media
such as internet (through various devices desktop, laptops,
tablets smartphones etc.) through which the customer and
the seller may enter into a transaction for sale and
purchase, so as to benefit both the parties in the long run.
Indian online retail segment is growing fast, with revenues
this year estimated to rise to Rs 10,000 crore from Rs
6,500 crore, according to the Internet and Mobile
Association of India. Many of the online retail portals,
these days, act as online market place where they facilitate
the transaction between the buyer and seller through their
web portals. E- Bay‟s business model is based on the
similar concept. Flipkart turned into itself into a
marketplace model few months back. Amazon India, due
to the regulatory compulsions, is playing in a market place
model. One of the recent entrepreneurial successes in
creating the market place model is ShopClues.com. It
claims itself to be the India‟s first and the largest fully
managed marketplace. It is one of the fastest growing
online market place and has crossed a significant
milestone with the ecommerce firm now getting over 40,
000 peak orders in a day. The tremendous growth in order
flows in a short span of just 22 months has established the
e-retailer (Shopclues.com) as a pre-eminent player among
ecommerce companies in the country. With over 9 million
monthly visitors on the site and more than 2.5 million
products worth Rs.6100 crore in listed merchandise value,
the company has fast emerged as a preferred destination
for shoppers. (Shopclues, 2013)

Serving Nation"
Through their presence in the online space the
marketers are able to sell online which include the ability
to reach a large number of consumers worldwide (Strauss
and Frost, 1999); to reach out to the younger lot of
population; and to fight the constraints of sale through
traditional means of physical presence in stores (La and
Kandampully, 2002), which ultimately increases
productivity and efficiency.
Advantages for customers to buy online include easy
and wide access of products, services, information; overall
convenience; better deals; ability to compare products and
prices; convenience of receiving the product at their door
step and direct effects of functional and utilitarian benefits
(Seiders et al.,2000; Ruyter et al., 2001; Chen and Chang,
2003). However , some customers might prefer to shop
and browse on the internet due to the fun, enjoyment and
excitement involved, that is the emotional and hedonic
pleasures, either as individuals or as social groups or they
may just want to have a feel of the product before actually
planning to buy it (Bloch and Richins, 1983; Childers et
al., 2001; Menon and Kahn, 2002; and Parsons, 2002).
Table 1
Top e-retail portals in India
Name
Year of
Start
Facebook
Likes
Daily
revenue
(USD)
Daily page
views
Alexa
Indian
Rank
Daily
pages/
visitor
Daily
time on
site
(Mins)
Flipkart.com 2007 2.3 million 21,019 7 million 10 9.09 8.01
Snapdeal.com 2010 1.7 million 9880 3.9 million 21 5.97 6.32
Jabong.com 2012 1.7 million 7416 2.5 million 24 6.4 6.18
ebay.in 2005 2.5 million 9,429 3.1 million 30 11.1 10.17
Myntra.com 2007 1.6 million 6383 2.1million 36 5.58 6.24
Amazon sites 2013 1.6 million 5,528 1.8 million 37 7.54 6.33
Shopclues.com 2011 1.3 million 4177 1.4 million 61 7.11 7.28
junglee.com 2012 3.9 million 2773 924,370 82 4.74 3.2
Homeshop 18 2011 1.1 million 3,041 1 million 84 5.13 4.43
tradus.com 2010 761480 3,477 1.2 million 87 NA NA
Infibeam 2007 1 million 1753 584485 138 5.39 4.45
Yebhi 2009 1.5 million 1429 476,190 172 6.64 5.42
craftsvilla.com 2011 543,000 260 86,560 943 10.8 13.52
bestylish.com 2011 161,000 161 53787 1339 6.4 5.56

Serving Nation"
So, a consumer‟s motivation to shop online may be
either due to an utilitarian motive as a „problem solver‟ or
a hedonic motive in terms of „fun, fantasy…and
enjoyment‟ (Hirschman and Holbrook, 1982).
Fig.1. Determinants of attitude formation in the context of e-retail
shopping
II. CONSUMERS ATTITUDE TOWARDS E-RETAIL
India's e-commerce market is expected to touch $8.8
billion (over Rs 54,000 Crore) in 2016 which has led to
many more entrepreneurial ventures and corporate backed
e-retail ventures to enter into this business. We see
corporate players like Big Bazaar in to this segment
through its arm Future Bazaar.com; Times of India group
through Shopping.indiatimes.com; India today Media
group through bagittoday.com. These shopping portals in
addition to presenting innovative marketing solutions to
the consumers‟ needs have the benefit of their additional
resources such as Big Bazaar can do combined
advertisements for both its brick and mortar stores and
online stores, the consumers can see the products at stores
and order it online to save themselves from the hassles of
carrying and transporting the products and vice versa, they
can have a feel of the product online and enjoy the
physical experience of shopping with predetermined
minds on what to purchase in the store, enabling the
consumer to make a better informed decision on his/her
purchase.
The shopping portals of media houses have benefit of
getting their products and brand advertised though their
own media vehicles for example, the advertisements of
products on indiatimes shopping very frequently appears
in their group‟s newspaper “The Times of India”. These
are also financially backed up by their corporate parents
who have deep pockets to sustain them in long terms. In
light of this, it is extremely important to leverage one‟s
competencies.
Sahneyet.al. (2008) identifies the factors, leading to
online retail purchase by the Indian consumer. As depicted
in Fig. 1, this can be divided into utilitarian and hedonic
factors. The utilitarian factors include ease of use of the
online portals, discounts offered by the retailer,
convenience to the customer, availability of wide range of
products, appraisal with detailed information of the
products and the ability of the consumer to make a better
informed choice and to be able to compare the products of
different brands and also the similar products provided by
different e-retailers. Hedonic dimension is related to the
emotional benefits of online shopping i.e. the enjoyment
experienced by the consumer during the purchase process
which consist of browsing the online store etc.
III. CURRENT SCENARIO OF E-RETAIL IN INDIA
There are numerous layers in the e-retail segment in
India. Many new players, mostly the entrepreneurial
venture of young techies with experienced management
professionals backed by financial funding from venture
capitalists Top e-retail portals along with the related data
are presented in Table 1. As of now, all major e-tailing
companies in India are operating in huge losses. Etailing
India an Indian knowledge repository for the online retail
industry reports craftvilla.com to be the India‟s first
profitable e-retailer, tough it is a niche player in this
market and have comparative smaller scale and product
portfolio. Leading Indian online retailers, including
Snapdeal and fashion portal Myntra, expect to turn
profitable in the next two years, signalling a seismic shift
in an industry where so far growth has been pursued at the
expense of the bottomline. Jabong.com, a part of the
Germany‟s Rocket Internet group, gets around 14,000
orders daily, which is reported to be the third largest
player in the Indian market. In terms of the scope for
future growth of the sector, More than 60% of India‟s 73.9
million Internet users visit online retail websites, spending
an average of 28.4 minutes, less than what people spend in
countries such as China, Russia, Brazil and even the
worldwide average of 84.3 minutes, according to the
comScore (Agarwal 2013), this points towards a scope of
huge growth in future in this segment.

Serving Nation"
The fact is that the Internet is very cheap. Add to that a
young population with high aspirations. The share of
income they (the youth) spend on discretionary activities
of looking good or feeling good is substantial. Kunal Bahl,
cofounder of Snapdeal, an online marketplace, says the
company has grown manifold at Rs 2,000 crore in just
three years (Pani, 2013) and expects to reach about Rs
6,220 crore in gross merchandise sales by the next
financial year, and profitability the year after (Nair &
Gooptu, 2013) similarly all major online shopping portals
have huge growth plans for themselves and have support
of their financial investors which focus on growth rather
than profitability at least in the current growing phases of
these companies. Fig. 2 depicts the gross sales of all major
e-commerce companies operating in India (The
Economist, 2013)
Fig.2 Gross sales of top Indian e-commerce websites
Independent experts have estimated e-commerce
segment to have more than doubled in India to about $14
billion in 2012 from $6.3 billion in 2011. (Mint, 2013)In
Bangalore, fashion retailer Myntra aims to be profitable
by the end of 2014. While the firms continue to make huge
losses, the founders are riding on the waves of huge
valuation being done for these companies by the valuation
companies, which are mostly based on the current
sales. Sachin Bansal and Binny Bansal, founders of
Flipkart.com took home a handsome remuneration of Rs
10.25 crore ($1.7 million at current forex rates) each in the
six months between September 2011 and March 2012,
(Phadnis, 2013). To compare it with scenario in the US,
Darrell Cavens, co-founder and CEO of US-based Zulily,
a shopping portal for moms, which recently filed for a
$100-million IPO, took home $290,000 (Rs 1.74 crore) in
the last calendar year, including bonus payout (Phadnis,
2013).
This cautions us that these entrepreneurial ventures
seems to be overvalued but given the fact that it is not easy
to do business in India and overcoming other regulatory
measures, the valuators justify their projections.
Fig. 3 depicts the gross sales of the top e-retail
companies for the financial year 2013 which shows that
these companies have achieved inorganic growth in a very
short period of time.
Fig.3. Gross sales of Indian e-tailing companies (FY 2013)
IV. CONCLUSION
This paper presented some analysis about the current
scenario of e-tailing in India which is, by and large,
governed by the entrepreneurial ventures, recently
founded by the Indian ventures. The current state of these
ventures seems to be bright with the revenues running into
several hundred crores of Rupees for many of them.
Though these ventures are able to achieve these figures in
their revenues, they are running in huge operational
losses, i.e. the growth is currently being achieved at the
cost of profits. As this paper viewed these e-retail ventures
from the entrepreneurial perspective, it can be concluded
that the respective entrepreneurs who are able to sustain
these competitive markets have been able to reap the fruits
of the risk taken by them. As the sector is bound to grow in
future, it is a green area for the budding entrepreneurs to
innovate and excel.
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Serving Nation"
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Ranjana Agarwal is an Assistant Professor in Department of
Applied Sciences, Lord Krishna College of Engineering,
Ghaziabad for the past six years. She has taught various subjects
like „Engineering and Management Economics‟, „Industrial
Management‟, „Professional Communication‟, „Human Values‟
etc. to engineering and management students.

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