Categories: Tech & Society

How is the E-Commerce industry in India shaping up? – Insights by Accel India

Accel India, is a venture and growth equity firm and funds companies from inception through the growth stage. It is famous for it’s investments in Flipkart, Myntra and BookMyShow. The team have come up with some key insights into how the industry is transforming itself. For the purposes of report, online shopping covers only physical good commerce, and does not include travel, ticketing and food ordering. Below are the salient features from the report –

Online Shopping of Physical Goods will increase from $2B in 2013 to $8.5B in 2016
Only 17% of Indians are online, out of which 9% shop online, compared to >30% in other countries
Last Year was the rise of fashion category – fashion e-commerce GMV doubled since 2012
35% of online GMV in 2016 will be influenced by women
New Shoppers will come from 40M shoppers in the age group 19 – 24
3rd Party payments will become significant alternative to Cash on Delivery
Online retail is still very small portion of retail , with books in the leading : 4% in mobiles,0.2% in jewellery, 7% in books and 1% in fashion and footwear

The report lists reasons such as e-tailers not having mobile optimized sites for not having 1:1 conversions between traffic to mobile. Entrepreneurs like Annkur Agarwal echo similar sentiments, saying that product startups should build mobile first, providing evidence through PriceBaba.com’s monthly visitor stats – 51% of 1.8 million monthly visitors use a mobile browser.

The top 3 e-commerce states, according to the report are Delhi-NCR, Karnataka and Maharashtra. It’s no surprise that Delhi, Bangalore and Mumbai are also the top 3 startup destinations in India, the effect is now visible in customer behavior as well. Larger states such as Bihar and Chhattisgarh are waiting for the right infrastructure to pick up.

In a recent interview, Subrata Mitra, Partner at Accel Partner tells the below on what keeps him awake at night –

What keeps me awake is the number of people (in India) who have ever shopped online for physical goods from an e-commerce store; it’s around 20 million. Also, the average basket size of Indian’s shopping online is one sixth of China. The total market size of physical goods in e-commerce was $2 billion in 2013. If this market does not get to about $20 billion—which is not big since the US is a $250 billion market while China is about to cross $250 billion—we will not reach critical mass and maybe all of these companies will start tapering at some point.

But if it starts getting to $10 billion and beyond, I think Myntra, Flipkart and even Snapdeal could succeed.

Given the massive amounts of funding Flipkart and the likes have managed to raise, and new e-tailers coming up in varied and nice sectors, we predict that the growth is definitely upwards. But, the mushrooming of e-commerce portals does not help, as they constantly battle with price reductions, higher operational costs and digital visibility issues. Let’s wait and watch on Flipkart and Myntra, as the recent news still hints on the possible merger.

Here is the detailed slideshare of Accel Partner’s findings on Indian e-commerce :

[slideshare id=33017305&doc=accel-india-ecommerce-mar14-140401225936-phpapp01]

Saraswathi Pulluru

Telecom Consultant by Profession. Interested in Startups by Passion. Never tired to talk to and write about entrepreneurs, who are making the world a better place to live.

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View Comments

ZM says:

July 5, 2014 at 7:07 am

Yes, this is also a great time for the numerous offline retailers in India to start off on their online store. A quick way would be to use a hosted platform like Shopify, etc, since it gets the technology hassles out of the way, and is quite reasonably priced. The tips and apps listed on http://www.dotpaisa.com can be useful in building an effective store. Hope it helps!