As internet and mobile access become ubiquitous in India, the country’s eCommerce market is on the cusp of a trillion dollar digital opportunity. Read the full article here: https://www.bvp.com/atlas/internet-marketplaces-in-india

1. Internet
Marketplaces
in India
Anant Vidur Puri Mohammad Ibrahim Faruqi

2. India is a trillion-dollar
digital opportunity
Source: BVP Desk research
SHOPPING USERS, M
Users who transact on digital platforms
0.4 500
125
TOTAL DIGITAL ECONOMY, $B
All forms of eCommerce: online buying, online spending, digital transactions 1 1,000
100
DIGITAL SPEND / CAPITA, $
Annual $ spent online per person 250 2,000
750
2010 2021 2030F

3. Proliferation of Indian marketplaces
Logo list indicative of leading players in space
Finance
Automobiles
Opticals
Beauty
Re-commerce
Logistics
BVP investment
Grocery delivery
Consumer transportation
Pharmacy
Food delivery
Home services
Furniture
ACQ
in 2015

4. The way marketplaces are built in India has
evolved
Note: Justdial is not a Bessemer VP portfolio
Horizontal listing
marketplace
Vertical listing
marketplace
Vertical
transactional
marketplace
Full stack
transactional
managed marketplace

5. So, what’s
next?

6. New millennial
($50+ Billion)
Bharat
($50+ Billion)
Women
($50+ Billion)
Households
($50+ Billion)
SMEs
($100+ Billion)
16-30,
Male & Female
18–60,
Male & Female
18-60,
Female
30-60,
Male, Female,
& Kids
25-60,
Mostly Male
Metro / Tier 1+2
Tier
2+3+4 ++
Metro / Tier
1+2
Metro / Tier
1+2
Tier
1+2+3+4
English speaking Vernacular English/ Vernacular English/ Vernacular
English/
Vernacular
$$ ($10k) $ ($5k) $$ ($10k) $$$ ($12k) $$$ ($18k)
New consumer segments are emerging
Early Adopters
($100+ Billion)
What is their age/
gender?
18-30,
Male
Where do they live? Metro / Tier 1
What language do they
speak?
English speaking
What is their
disposable income?
$$ ($10k)
What brands
do they know
and trust?
INDIA 1.0
(2010-2020)
INDIA 2.0
(2021-2030)
Source: BVP Desk research

7. New distribution channels are emerging
CHOICE OF TARGET CUSTOMER DETERMINES DISTRIBUTION DESTINATION
Video Social D2C
Influencers

8. Emergence of D2C brands and B2B marketplaces
New Consumer Marketplaces
Direct to Consumer Brands
(D2C)
B2B Marketplaces
Note: The companies mentioned on this slide are only an indicative list
Customer Segment
– New Millennial, Women, Households
Customer Segment
– New Millennial, Women, Households
Customer Segment
– SMBs
Horizontal listing
marketplace
Vertical listing
marketplace
Vertical
transactional
marketplace
Full stack
transactional
managed
marketplace

9. 5 tenets of
India
marketplaces
1
INDIA IS A SUPPLY-CONSTRAINED MARKET
Build technology to on-board, standardize, manage, scale and retain supply
2
FULL STACK MODEL WINS EVERY TIME
End to end ownership across ecosystem creates superior customer experience
at lower cost leading to increased retention and higher gross margin
3
OWNING DISTRIBUTION CREATES A MOAT
Leverage mobile, social, video, and content to build sustainable moats before
ramping 3rd party distribution
4
CAC ALWAYS GOES UP WITH SCALE
Performance marketing channels cap out. Best companies identify repeatable
growth through a mix of social, UGC, video, TV and offline channels.
5
FLAT-LINE COHORTS UNLOCK LONG TERM VALUE
1% increase in flatlining cohort retention leads to 3X jump in long term value

10. How do we
evaluate?

11. Potential TAM of vertical $1-5B $5-10B >$10B
Net Revenue Growth (MoM) 5-10% 10-20% >20%
# of transactions to payback 3-4 1-2 <1
Repeat per year 1-2 2-3 >6
Marketplace “Take” <10% 10-25% >25%
CAC payback (months) >24 12-24 <12
GOOD BETTER BEST
Note:TAM = Total Addressable Market; MoM = month over month; CAC = Customer Acquisition Cost; Take = Marketplace Commission
OTHER FACTORS
- Category Leadership
- Competition
- Novel Growth Channels
- Social, video, influencers
- Full stack
- Management team
- Flatlining cohorts
- NPS
OUR FRAMEWORK FOR EVALUATING OPPORTUNITIES:
New Consumer Internet Marketplaces

12. Current TAM $1-5B $5-10B >$10B
Growth <5% 5-10% >10%
Gross Margins <40% 40-60% >60%
CAC Payback (months)) >24 12-24 <12
Own Channel distribution <50% 50-70% >70%
Inventory Management Stock Hybrid Just in Time
GOOD BETTER BEST
Note:TAM = Total Addressable Market; MoM = month over month; CAC = Customer Acquisition Cost; Take = Marketplace Commission
OTHER FACTORS
- Category Leadership
- Competition
- Repeats per year
- Social, video, influencers
- Omni-channel
- Management team
- Flatlining cohorts
- NPS
OUR FRAMEWORK FOR EVALUATING OPPORTUNITIES:
D2C Brands

13. Current TAM $10B $10-15B >$25B
Growth (MoM) <10% 10-20% >20%
CAC Payback (months) >18 12-18 <12
Pricing Power
Transparent on
both sides
Opaque on
one-side
Fully opaque
on both sides
Marketplace “Take” <10% 10-15% >15%
Software Enablement
Platform to connect
demand & supply
Dedicated demand &
supply side products
Full business &
collaboration suite on
both sides
GOOD BETTER BEST
Note:TAM = Total Addressable Market; MoM = month over month; CAC = Customer Acquisition Cost; Take = Marketplace Commission
OTHER FACTORS
- Supply-side fragmentation
- Category leadership
- Competition
- Working Capital
- Social, video, influencers
- Demand-side fragmentation
- Full stack
- Management team
- Flatlining cohorts
- NPS
OUR FRAMEWORK FOR EVALUATING OPPORTUNITIES:
B2B Marketplaces

14. The BVP India Internet Marketplaces Team
WRITE TO US
IndiaInternetMarketplaces@bvp.com
Anant Vidur Puri Anurag Begwani Mohammad Ibrahim Faruqi
Moksha Vishal Gupta
Mohammad Ibrahim Faruqi