INTERNET RETAILING IN INDIA

Euromonitor International
March 2014

I NT E RNE T RE T A I L I NG I N I NDI A P a s s p o r t I
E u r o mo n i t o r I n t e r n a t i o n a l
LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
Trends .......................................................................................................................................... 1
Competitive Landscape ................................................................................................................ 2
Prospects ..................................................................................................................................... 3
Channel Data ............................................................................................................................... 5
Table 1 Internet Retailing by Category: Value 2008-2013 ......................................... 5
Table 2 Internet Retailing by Category: % Value Growth 2008-2013 ........................ 5
Table 3 Internet Retailing Company Shares: % Value 2009-2013 ............................ 5
Table 4 Internet Retailing Brand Shares: % Value 2010-2013 .................................. 6
Table 5 Internet Retailing Forecasts by Category: Value 2013-2018 ........................ 7
Table 6 Internet Retailing Forecasts by Category: % Value Growth 2013-2018 ....... 7


I NT E RNE T RE T A I L I NG I N I NDI A P a s s p o r t 1
E u r o mo n i t o r I n t e r n a t i o n a l
INTERNET RETAILING IN INDIA


HEADLINES
Internet retailing increases in current value by 20% in 2013, rising to Rs170.0 billion
Apparel and footwear internet retailing becomes increasingly popular among Indias urban
consumers
Apparel and footwear internet retailing becomes the most important internet retailing channel
in 2013
Dell India Pvt Ltd remains the leading player in internet retailing with an 8% value share in
2013
Internet retailing is expected to increase in constant at a CAGR of 12% over the forecast
period


TRENDS
Internet retailing benefited from a major paradigm shift in retailing in India towards the end of
the review period as a substantial proportion of the countrys urban consumers began to
switch from store-based retailing to internet retailing. The main contributor to this shift was the
rise of apparel and footwear internet retailing over the course of 2013. Companies such as
Flipkart, Myntra and Jabong, among others, have begun to advertise their online apparel lines
aggressively through media such as television advertising campaigns and social media
platforms, specifically Facebook. These companies offer a wide range of apparel brands,
many of were carry lower unit prices than similar products offered under economy brands or
private label in store-based retailing outlets. This drove a high number of Indian consumers,
especially women, to begin making more use of internet retailing to shop for apparel and
footwear, personal accessories and eyewear.
Internet retailing in India increased in current value by 20% in 2013. This was a marginally
lower rate of growth than the 22% current value CAGR recorded in the category over the
entire review period. Much of this growth remained consistent with the high number of players
entering the channel, the wider availability of certain products and brands, the lower pricing of
internet retailers and, last but not least, rising access to the internet across India.
14% of Indias total population used the internet regularly during 2013. The number of internet
subscribers in the country increased by 5% during 2013. This growth was primarily driven by
increasing numbers of broadband subscribers, a figure which increased by 14% in 2013. The
increasing internet penetration in India remains one of the major reasons for the strong growth
recorded in internet retailing during 2013.
Consumer electronics and video games hardware internet retailing remained the primary
internet retailing category in India in 2013. The so-called showrooming trend became
extremely popular in India in 2013. This involves consumers will visiting a store-based retail
outlet to see, touch and feel the products they are considering purchasing before returning
home to purchase it online at the lowest possible price. In addition, apparel and footwear
internet retailing also became extremely popular among Indias vast urban consumer base
towards the end of the review period as price positioning and wide range of popular brands on
offer by Indias leading apparel and footwear specialist retailers continues to attract a huge
young consumer base.
I NT E RNE T RE T A I L I NG I N I NDI A P a s s p o r t 2
E u r o mo n i t o r I n t e r n a t i o n a l
Beauty and personal care internet retailing was the least popular internet retailing category in
India in 2013. This was mainly because the presence of these products in internet retailing
remains as relatively recent and is still growing from a low base.
The private label products which are now widely available in Indias leading chained
department stores and apparel and footwear specialist retailers chains such as Lifestyle,
Shoppers Stop and Pantaloons were the products most negatively affected by the relentless
growth of internet retailing towards the end of the review period as many Indian consumers
turned to internet retailing in search of low-priced apparel, footwear, personal accessories and
eyewear. Many of these internet retailers compete directly with the private label lines of
Indias leading store-based retailers.
Apparel and electronics specialist retailers was the store-based retailing channel most
adversely affected by the strong growth of internet retailing in India during 2013. The
showrooming trend is now prevalent in India and this involves people visiting store-based
retail outlets to gain personal experience of the products they are thinking of purchasing
before returning home to search online for the best bargains.
Mobile internet retailing comprised 9% of total internet retailing value sales in India in 2013.
The usage of mobile internet for online shopping witnessed strong growth in 2013, which was
primarily driven by the rising use of smartphones among urban consumers. All of the leading
players in internet retailing in India have already developed mobile internet websites which
allow consumers to navigate their websites and make purchases using their smartphones.
Internet retailing witnessed strong growth in 2013, although this had little effect on the
activities of the countrys store-based retailers as the sheer level of volume and value sales
generated by store-based retailing indicates that store-based retailing remains a much larger
channel than internet retailing. However, many of Indias leading store-based retailers did
recognise the growing potential of internet retailing towards the end of the review period,
which led them to develop a multi-channel approach to their retailing activities. A high number
of Indias store-based retailers have now developed their own internet retailing websites in
order to benefit from the growing demand for internet retailing.
Cash on delivery remained the most popular payment method for Indian consumers engaging
in online shopping during 2013. This payment method allows consumers to maintain trust in
internet retailers as they are only required to pay once the product has been delivered to their
doorstep.
During 2013, Yebhi.com inaugurated its unique Try and Buy concept, which involves the
company offering consumers the option to select items they would first like to try, then opt for
cash on delivery payment. Once delivered, consumers then pay for only those items which
they have definitely decided to purchase. This system has so far been a huge success among
Indian consumers, although the retailer is offering this option to consumers living in only a few
neighbourhoods in selected cities of India and hence its popularity remained limited at the end
of 2013. Concepts such as same-day delivery were still in the process of being established by
Indias internet retailers at the end of the review period.


COMPETITIVE LANDSCAPE
Dell India Pvt Ltd maintained its lead in internet retailing in 2013 with an 8% value share. Dell
maintained its leading position in internet retailing in spite of its presence in store-based
retailing as the company continues to use internet retailing as its primary retail channel. This
allows consumers to customise their laptops or desktops before committing to a purchase. In
addition, Dell offers consumers far more options when shopping online than in store-based
retailing channels.
I NT E RNE T RE T A I L I NG I N I NDI A P a s s p o r t 3
E u r o mo n i t o r I n t e r n a t i o n a l
Jasper Infotech Pvt Ltd witnessed the strongest growth in internet retailing in India during
2013 through its Snapdeal.com website as its value sales increased by 400% to Rs2.6 billion.
This strong performance was recorded as the company remains the only internet retailer in
India offering such a wide range of products as apparel and footwear, personal accessories,
eyewear, consumer electronics and video games hardware, consumer appliances, beauty
and personal care, consumer health, traditional toys and games, furniture and homewares,
jewellery and watches, media products and automotive products. In addition, the company is
already well-known for its generous discounts and frequent special offers on all brands and
products, which makes it extremely popular among many Indian consumers.
Pure players continued to outperform their multi-channel rivals in internet retailing in India.
This is mainly because pure players offer better discounts and more variety in terms of
brands, price points and products. Many of the leading multi-channel players in internet
retailing in India are still in the process of developing fully and this leaves them lagging behind
in terms of numbers of regular customers.
There were a handful of noteworthy acquisitions in internet retailing in India during 2013.
Snapdeal.com acquired Shopo.in during the year, while Myntra.com acquired Fitiquette and
Zovi.com acquired Inkfruit.com. Most of these acquisitions occurred as all internet retailing
companies operating in India continued to suffer financial losses during the year in spite of the
very high volume sales that some of them are capable of achieving. This led some of the
smaller companies operating in internet retailing either to close down altogether, while others
were simply acquired by their larger rivals.
There was a roughly even mix of domestic and international companies operating in internet
retailing in India during 2013. This was mainly because of the growth which remains strong in
internet retailing channel and the channels ongoing potential to attract high numbers of new
retailers.
The 10 leading companies in internet retailing in India remained pure internet retailers at the
end of the review period. So-called bricks and clicks multi-channel players have either
entered internet retailing quite recently, which leaves them comparatively unpopular in
comparison with pure internet retailers, or they have not pushed their internet retailing
channels aggressively enough to have generated sufficient popularity to hold a top-ten
position in the channel.
The use of e-marketplaces and consumer-to-consumer transactions increased in India over
the course of 2013, with websites such as OLX.com and Quikr.com advertising aggressively
through television spots. These websites are becoming quite popular among Indias younger
generation, especially those in the 18-30 age group, many of whom were more open to the
idea of consumer-to-consumer transactions, certainly more so than older generations of
Indian people.
Bata.com, the website of store-based apparel and footwear specialist retailer Bata, and
Trendin.com, the internet retailing website of store-based retailer Aditya Birla Nuvo Ltd, were
two major new internet retailing websites launched by well-established Indian store-based
retailing companies during 2013 as each of these companies seeks to continue benefiting
from growth in internet retailing.


PROSPECTS
Internet retailing is expected to emerge as the next major retailing channel in India over the
forecast period. Internet retailing is expected to comprise 1% of total retailing value sales in
India by the end of 2018. Much of this is set to be due to the low prices on offer online, as well
as the convenience of shopping from home and the availability of a high number of leading
I NT E RNE T RE T A I L I NG I N I NDI A P a s s p o r t 4
E u r o mo n i t o r I n t e r n a t i o n a l
brands, all of which is set to combine to drive numerous consumers to shift away from store-
based retailing towards internet retailing.
Rising per capita expenditure and increasing demand for high-end products such as
smartphones, cameras and super premium fragrances, among others, led to a significant rise
in value sales in internet retailing in 2013 and these trends are expected to continue
developing throughout the forecast period.
Internet retailing in India is expected to increase in constant value at a CAGR of 12% over the
forecast period, a higher rate of growth than the constant value CAGR of 10% recorded in the
category over the entire review period. Much of this is set to be due to the anticipated
increase in internet penetration in India over the forecast period, while the rising number of
players operating in the channel and, finally, the increasing levels of trust which many
consumers place in the channel, are likely to help internet retailing to reach its full potential
before the end of the review period.
M-commerce remained a niche channel for internet retailing sales at the end of the review
period, although rising smartphone usage is expected to accelerate in India over the forecast
period, boosting the growth potential of m-commerce.
The major threat to growth in internet retailing over the forecast period is set to be the low
penetration of computers and the low levels of internet access among Indias rural population,
a group which constitutes the majority of the Indian population. Nevertheless, the Indian
government continues to make efforts to make internet available to people living in all of
Indias rural areas, although it will take a minimum of three years before substantial numbers
of Indian consumers learn how to make best use the of this new technology and finally adopt
internet retailing as a regular activity.
23% of the Indian population is expected to be using the internet regularly by 2018.
Considering the countrys extremely high population, this is set to represent a very substantial
number of people gaining access to the internet. This is set to drive growth in internet retailing
throughout the forecast period.
Beauty and personal care internet retailing, traditional toys and games internet retailing,
apparel and footwear internet retailing, personal accessories and eyewear internet retailing,
leisure and personal goods internet retailing, consumer electronics and video games
hardware internet retailing, consumer appliances internet retailing and consumer health
internet retailing are all expected to perform strongly in India over the forecast period. All of
these categories were already performing very well in 2013 and for this reason it remains
likely that similar growth patterns will remain in effect during the forecast period.
Flipkart, Myntra and Jabong are expected to continue performing strongly in India throughout
the forecast period as all of these companies were already in leading positions in internet
retailing during 2013 and the rising levels of investment in these companies from venture
capitalist is set to help them to remain financially viable. This is set to be especially important
as none of these companies are expected to break even for at least three years.
Sify.com is expected to underperform internet retailing overall over the forecast period as its
reputation has suffered due to its offering low-quality products, failing to deliver many of its
products in a timely fashion. This negative image will now be very hard for the company to
change unless drastic measures are taken and so far the company has made no attempts to
rectify negative perceptions of it.
Both pure players and bricks-and-clicks internet retailers are set to focus more on reducing
delivery times, offering cash on delivery as a payment option and stocking increasingly wide
varieties of products during the forecast period, while strong branding and clear price
positioning are also set to become increasingly important, placing those companies which
ignore these aspects suffering over the forecast period.
I NT E RNE T RE T A I L I NG I N I NDI A P a s s p o r t 5
E u r o mo n i t o r I n t e r n a t i o n a l


CHANNEL DATA

Table 1 Internet Retailing by Category: Value 2008-2013

Rs million, retail value rsp excl sales tax

2008 2009 2010 2011 2012 2013

Beauty and Personal Care - - - - 180.2 234.0
Apparel and Footwear 3,696.9 5,267.1 7,785.5 10,530.2 13,629.6 16,910.1
Consumer Electronics 14,585.7 18,223.3 20,883.7 28,818.9 34,944.1 45,364.2
and Video Games Hardware
Consumer Healthcare 443.6 506.7 586.0 715.7 896.4 1,240.6
Consumer Appliances 1,827.2 2,267.5 2,905.3 3,434.7 4,197.7 5,231.8
Home Care - - - - - -
Home Improvement and - - - - - -
Gardening
Housewares and Home - - - - - -
Furnishings
Media Products 3,325.1 4,655.2 7,111.7 9,883.7 12,799.4 16,408.8
Food and Drink - - - - - -
Traditional Toys and 43.8 55.1 80.9 104.4 136.0 175.4
Games
Other Internet Retailing 39,892.1 45,578.0 52,268.8 64,730.1 75,109.1 84,466.2
Internet Retailing 63,814.4 76,553.1 91,621.9 118,217.6 141,892.5 170,031.1
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources


Table 2 Internet Retailing by Category: % Value Growth 2008-2013

% current value growth, retail value rsp excl sales tax

2012/13 2008-13 CAGR 2008/13 Total

Beauty and Personal Care 29.9 - -
Apparel and Footwear 24.1 35.5 357.4
Consumer Electronics and Video Games 29.8 25.5 211.0
Hardware
Consumer Healthcare 38.4 22.8 179.6
Consumer Appliances 24.6 23.4 186.3
Home Care - - -
Home Improvement and Gardening - - -
Housewares and Home Furnishings - - -
Media Products 28.2 37.6 393.5
Food and Drink - - -
Traditional Toys and Games 29.0 32.0 301.0
Other Internet Retailing 12.5 16.2 111.7
Internet Retailing 19.8 21.7 166.4
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources


Table 3 Internet Retailing Company Shares: % Value 2009-2013

% retail value rsp excl sales tax
I NT E RNE T RE T A I L I NG I N I NDI A P a s s p o r t 6
E u r o mo n i t o r I n t e r n a t i o n a l
Company 2009 2010 2011 2012 2013

Dell India Pvt Ltd 13.2 12.8 11.1 8.9 8.0
Flipkart Online - 0.0 0.4 3.5 4.9
Services Pvt Ltd
Myntra.com 1.9 2.3 2.6 3.4 4.1
Jabong.com - - - 1.8 2.2
Amazon.com Inc 0.7 0.9 0.9 1.2 1.6
Jasper Infotech Pvt Ltd - 0.1 0.1 0.4 1.5
eBay India Pvt Ltd 0.7 0.8 0.9 1.1 1.2
Network18 Group 0.6 0.6 0.7 0.9 1.0
Times Internet Ltd 1.4 1.4 1.2 1.0 0.8
Sify Ltd 0.6 0.7 0.7 0.6 0.5
Rediff.com India Ltd 1.0 0.9 0.7 0.5 0.4
Indiaplaza India Pvt Ltd 0.7 0.6 0.5 0.4 0.4
Actoserba Active - - 0.2 0.2 0.2
Wholesale Pte Ltd
Bata India Ltd - - - - 0.1
Future Value Retail Ltd 0.9 0.6 0.2 0.1 0.0
Digitail Management - 0.2 0.8 - -
Services Pvt Ltd
Trinethra Super Retail - - - - -
Pvt Ltd
Fabmall (India) Pvt Ltd - - - - -
Others 78.4 78.2 79.1 76.1 73.2
Total 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources


Table 4 Internet Retailing Brand Shares: % Value 2010-2013

% retail value rsp excl sales tax
Brand Company 2010 2011 2012 2013

Dell Dell India Pvt Ltd 12.8 11.1 8.9 8.0
Flipkart Flipkart Online 0.0 0.4 3.5 4.9
Services Pvt Ltd
Myntra Myntra.com 2.3 2.6 3.4 4.1
Jabong.com - - 1.8 2.2
Snapdeal.com Jasper Infotech Pvt Ltd 0.1 0.1 0.4 1.5
Amazon.com Amazon.com Inc 0.9 0.9 1.2 1.4
ebay.in eBay India Pvt Ltd 0.8 0.9 1.1 1.2
HomeShop18 Network18 Group 0.6 0.7 0.9 1.0
Indiatimes Shopping Times Internet Ltd 1.4 1.2 1.0 0.8
Sify Sify Ltd 0.7 0.7 0.6 0.5
India Online Rediff.com India Ltd 0.9 0.7 0.5 0.4
Indiaplaza Indiaplaza India Pvt Ltd 0.6 0.5 0.4 0.4
Zivame Actoserba Active - 0.2 0.2 0.2
Wholesale Pte Ltd
Junglee.com Amazon.com Inc - - 0.1 0.1
Bata Bata India Ltd - - - 0.1
Futurebazaar Future Value Retail Ltd 0.6 0.2 0.1 0.0
Letsbuy.com Digitail Management 0.2 0.8 - -
Services Pvt Ltd
Fab Mall Fabmall (India) Pvt Ltd - - - -
Fab Mall Trinethra Super Retail - - - -
Pvt Ltd
Others 78.2 79.1 76.1 73.2
Total 100.0 100.0 100.0 100.0
I NT E RNE T RE T A I L I NG I N I NDI A P a s s p o r t 7
E u r o mo n i t o r I n t e r n a t i o n a l
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources


Table 5 Internet Retailing Forecasts by Category: Value 2013-2018

Rs million, retail value rsp excl sales tax

2013 2014 2015 2016 2017 2018

Beauty and Personal Care 234.0 345.2 448.4 531.4 625.3 735.7
Apparel and Footwear 16,910.1 19,089.0 22,290.7 26,583.3 31,216.7 36,657.5
Consumer Electronics 45,364.2 54,860.7 61,332.7 70,190.6 74,121.7 78,276.2
and Video Games Hardware
Consumer Healthcare 1,240.6 1,580.0 1,981.8 2,462.4 3,049.2 3,775.9
Consumer Appliances 5,231.8 5,523.0 5,877.2 6,157.0 6,445.7 6,696.4
Home Care - - - - - -
Home Improvement and - - - - - -
Gardening
Housewares and Home - - - - - -
Furnishings
Media Products 16,408.8 20,806.4 25,633.5 31,042.1 36,940.1 42,665.8
Food and Drink - - - - - -
Traditional Toys and 175.4 196.0 213.5 225.7 231.0 236.6
Games
Other Internet Retailing 84,466.2 96,156.9 105,094.7 116,065.3 125,530.7 136,375.0
Internet Retailing 170,031.1 198,557.2 222,872.5 253,257.8 278,160.4 305,419.1
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
Note: Forecast value data in constant terms


Table 6 Internet Retailing Forecasts by Category: % Value Growth 2013-2018

% constant value growth, retail value rsp excl sales tax

2013-18 CAGR 2013/18 TOTAL

Beauty and Personal Care 25.8 214.4
Apparel and Footwear 16.7 116.8
Consumer Electronics and Video Games Hardware 11.5 72.6
Consumer Healthcare 24.9 204.4
Consumer Appliances 5.1 28.0
Home Care - -
Home Improvement and Gardening - -
Housewares and Home Furnishings - -
Media Products 21.1 160.0
Food and Drink - -
Traditional Toys and Games 6.2 34.8
Other Internet Retailing 10.1 61.5
Internet Retailing 12.4 79.6
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources