Indian E-commerce Hype – The Reality check

Indian Ecommerce - Reality CheckWe have already covered the phase of Indian eCommerce Startup Valuations breaking through the roof between 2013 to 2015. The year 2016 saw funding crunch, the sector has had a reality check. GMV is no longer the holy grail and the focus has now shifted to metrics such as the net promoter score, user monetisation and customer experience. Also, there is a growing recognition of the fact that India is different from China and may not necessarily mirror the early e-commerce trends and trajectory in China.

Indian e-commerce firms have pursued several initiatives including increasing the commission rates (at an overall portfolio level), controlling the logistics costs (particularly returns), rationalising discounts and shifting the portfolio mix in favour of high-margin categories to curtail the losses and create a foundation for achieving profitability. Regulations have so far been

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Rise and Fall of Indian eCommerce 1.0 Startups Valuations

Indian eCommerce Storry 2013 to 2015The Indian eCommerce Saga trails the Americas by a decade. 2013 to 2015 were eventful years for the Indian internet sector. Overall, 2015 GMV growth for the e-commerce sector saw the fastest pace in the past five years, despite a higher base. Funding activity, too, peaked in 2015. Investor optimism was high as well valuations doubled in many successive rounds of funding within a gap of just a few months. There were several large funding rounds such as Flipkart’s US$1 bn one, followed by a couple of US$700 mn funding rounds over the next six months, valuing the company at US$15 bn. Snapdeal raised over US$600 mn in 2014 and followed it with another US$500 mn round in mid-2015, while Paytm raised US$680 mn in Sep-15 from Alibaba and Ant Financials (Alipay). Ola also raised over US$1.1 bn between Oct-14 and Nov-15, in three rounds of funding

The Flawed GMV Based Valuations Model
GMV was the most widely tracked key performance indicator for ecommerce companies — not only internally, but for investors as well. Companies expanded GMV without focusing much on unit economics. This led to an increase in discounting and marketing

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How Amazon’s Competitors Rank on Last Mile Delivery ?

ecommerce-delivery-modelsAmazon’s strategy, with ever-shorter delivery options, has allowed a pure eCommerce player to gain a foothold in Local commerce and an increasingly bigger share of consumers’ wallets. But while Amazon has always been and will remain retailers’ top competitor in many product categories – especially in consumer products – some of these retailers could actually benefit from the company’s growing fulfillment capabilities. Today, Amazon remains the clear leader in fulfillment, based on number of offerings, global fulfillment center footprint, and ability to manage demand elasticity through its digital assets.

Today, however, services such as Google Express, Postmates, or Instacart and new fulfillment models based on real-time driver networks such as Uber, Lyft, and

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How eCommerce Impacted Logistics Business in India?

eCommerce Logistics IndiaECom Express is a logistics company catering to the needs of e-commerce industry, which is growing at a fast pace in India. The company was launched in early 2013 focused on providing the last mile delivery services to the eCommerce companies. ECom Express started with 311 employees in 35 cities. It has grown to 653 delivery centers in 180 cities with 15,000 employees and 450,000 Shipments/day. 90% of the staff are delivery people.

Logistics is a relatively large part of cost for eCommerce players and they intend to rationalize it. However, ECom Express believe that the quality of services in terms of timely delivery, reliability and lower product returns are key factors for eCommerce player to select a logistics company and not necessarily pricing. ECom Express is confident that given the quality of its services and its ability to delivery products to even less-accessible areas places it well in the market. The company

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Jabong & FabFurnish Sales / Profit Metrics

Jabong Sales MetricsIn an industry where not much data is available given most companies are unlisted, we have got some details from Rocket Internet which has stake in Jabong (fashion) & FabFurnish (furniture).

Jabong’s Gross Merchandise Value (GMV) rose 136% yoy in CY14 leading to a 136% yoy increase in net revenue. Encouragingly, Jabong indicated that majority of the orders are being placed by repeat customers. FabFurnish’s GMV too rose 125%yoy during the same period. Jabong’s gross loss expanded to Rs1.6bn (+400%yoy), indicating high competition. Capex intensity has risen from 3.7% capex/sales in CY13 to 4.8% in CY14 on investment in IT and infrastructure. Net working capital too rose by ~250%yoy driven by

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How is eBay doing in Chinese e-Commerce ?

eBay China CommerceIn 2003, eBay acquired what was at the time one of the leading e-commerce sites in China – EachNet – for $150mn. And in 2004, the company began a more aggressive push into the local market. eBay signed exclusive advertising rights with major portals Sina, Sohu, and Netease and reportedly spent $100mn to build out its operations in China. But, by the end of 2006, due primarily to competition (including free listings and other promotions by a few competitors), the company folded the eBay EachNet operation into a joint venture with Tom Online. Since then, Bay’s focus in China has been on helping local sellers access eBay’s network of buyers outside of China.

Since then eBay has spoken very little with

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3 Key e-Commerce eco-system enablers in India

e-commerce ecosystem enablesIn a survey of around 25 industry participants such e-commerce companies operating in the fields of classifieds, online travel, e-tailing, mobile advertising, logistics, payment and data analytics, we found the Top 3 eco-system enabler for e-commerce to be grow leaps & bound in India as under.

Affordable mobile devices/tariffs
Declining smartphone prices, falling mobile data tariffs and improving 3G coverage will help accelerate the adoption of e-commerce in India. We expect the mobile opportunity in India to be bigger than fixed-line as many first time users of e-commerce will access the internet via a mobile device given the faster pace of smartphone penetration than PC penetration. As such, we expect

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State & Scope of Online Travel Market in India

Online Travel IndustryThe travel market size in India is US$19.6bn, of which 35% is transacted online, which puts the size of online travel market in India at US$6.9bn. Interestingly, in India, after air travel, it is rail transportation which draws maximum online bookings. Out of the US$6.9bn in online sales, air travel constitutes $4.1bn and rail transportation $2.2bn.

How Indian online travel market differs from the US market?
Hotel reservation and packaged tours are the biggest online travel spend segments in the US aggregating to 56% of total online travel spends, followed by air tickets which constitute 37% of the spends. As against this, in India, air tickets constitute 58% of online travel spends with Hotels & Packages, being a nascent

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SnapDeal e-nabling Small Retailers to Sell Online & Expand Verticals

92% of the US$600 bn market is unorganized. India is a hub of almost 50 mn small and medium businesses. The problem for the offline markets are high real estate costs, low product discoverability, limited assortment merchandising and low reach. Online markets account for only US$2 bn currently.

How online market places are helping? It is easier to figure out trends on online markets and prepare the products accordingly. Also, working capital position of the retailer can be a lot better given low product batches. Mr Bahl gave a specific example of the benefits accruing to one of his customers from low working capital and greater planning and production flexibility. The same company has now been able to successfully branch out into another product category.

SnapDeal lists the following

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Stop! The Internet in India – Exponential Growth Ahead!!

From Shaadi to Shopping, Banking to Travels, Learning to Leasing, The Internet is India’s new mantra—slowly but surely it is gaining commercial scale in areas such as advertising, retail and travel. The Indian Internet story is unique—it is already large (190 mn Internet users), but still has an exponential growth ahead of it in terms of penetration (only 17%) and participation (less than 10% Internet users transact online). Over three-fourths of its users are less than 35 years old and thus keen to embrace this change. The Indian Internet market is driven by (1) High Speed Connectivity (2) Content, (3) Rising Income and

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