Cashback News – Aug 19: India e-commerce will hit $38 billion by end of 2016, up 67%

India e-commerce will reach $38 billion in 2016, up 67%

India e-commerce will reach $38 billion in 2016, up 67%So what’s happening in one of the fastest growing e-commerce markets in the world? That would be India and we’ve got news, insights and trends to keep you current. Forrester Research estimates the total value of e-commerce in 2015 was more than $22 billion. That means India is in the early stages of development but Indian business group Assocham believes 2016 e-commerce will reach $38 billion, up 67%. Impressive by any measure.

A report by Nasscom says the number of Internet users will double to more than 730 million by 2020 and 75% of that growth will come from rural India. Of the top ten e-commerce companies, FlipKart ranked first with $325.96 million in web sales in 2015 according to StatistaBoston Consulting Group (BCG) predicts the number of rural Indian internet users will more than double from 120 million in 2015 to 315 million in 2020, providing a powerful engine of growth for e-commerce. BCG says these new rural consumers will create big challenges and opportunities for e-commerce companies.

So who is the most profitable retail chain in India? That would be Canteen Stores Department (CSD), the defence canteen stores which had sales of $2.53 billion – an attractive market for wholesalers and manufacturers. Amazon, Flipkart and other e-commerce companies are testing new sales ideas in preparation for the Fall festive sales season including lower commissions, sale prices and other strategies. Moglix, is a B2B e-commerce platform hoping to capitalize on the traditional trillion-dollar industrial sales marketplace. Small SME exports on emerging platforms have grown 50%-70% in the past five years creating brand new jobs, investment and business growth.

E-commerce in India: Accelerating growth

ecommerce-in-india-accelerating-growth.pdfAccording to Forrester Research, an independent technology and market research firm, only 16% of India’s total population was online in 2013 and of the online users only 14% or 28 million were online buyers. India, therefore, was still in a nascent or immature stage of evolution of online retail spending. China was in ascending stage at 50%, whereas Japan (69%), Australia (57%) and South Korea (70%) were in mature stage.

India’s growth potential
ecommerce-in-india-cartSince the eCommerce industry is fast rising, changes can be seen over a year. The sector in India has grown by 34% (CAGR) since 2009 to touch 16.4 billion USD in 2014. The sector is expected to be in the range of 22 billion USD in 2015.

Currently, eTravel comprises 70% of the total eCommerce market. eTailing, which comprises of online retail and online marketplaces, has become the fastest-growing segment in the larger market having grown at a CAGR of around 56% over 2009-2014. The size of the eTail market is pegged at 6 billion USD in 2015. Books, apparel and accessories and electronics are the largest selling products through eTailing, constituting around 80% of product distribution. The increasing use of smartphones, tablets and internet broadband and 3G has led to developing a strong consumer base likely to increase further. This, combined with a larger number of homegrown eTail companies with their innovative business models has led to a robust eTail market in India rearing to expand at high-speed.  Via

India’s e-commerce industry likely to touch $38 billion mark in 2016 e-commerce industry in the country is likely to be worth USD 38 billion by 2016, a 67 per cent jump over the USD 23 billion revenues for 2015, as per industry body Assocham. “India’s e-commerce market was worth about USD 3.8 billion in 2009, it went up to USD 17 billion in 2014 and to USD 23 billion in 2015 and is expected to touch whopping USD 38 billion mark by 2016,” Assocham said in a statement.

Increasing internet and mobile penetration, growing acceptability of online payments and favourable demographics has provided the e-commerce sector in India the unique opportunity to companies connect with their customers, it said. There would be over a five to seven fold increase in revenue generated through e-commerce as compared to last year with all branded apparel, accessories, jewellery, gifts, footwear are available at a cheaper rates and delivered at the doorstep, it added.

It noted that the buying trends during 2016 will witness a significant upward movement due to aggressive online discounts, rising fuel price and wider and abundant choice will hit the e-commerce industry in 2016. It observed mobile commerce (m-commerce) is growing rapidly as a stable and secure supplement to the e-commerce industry. Via

India’s internet base to touch 730 million by 2020: Nasscom DELHI: As rural India adopts Internet in increasing numbers, web users in the country are expected to more than double to 730 million by 2020, a Nasscom report said today.

‘The Future of Internet in India’, compiled by Nasscom and Akamai Technologies, pegs the Internet base in the country at 350 million in end-2015.

India, which has Internet user base next only to China, will remain the fastest growing market, the report said, adding that 75 per cent of new Internet of new Internet users will come from rural areas. An overwhelming majority (75 per cent) of these new users are expected to consume data in local languages. Via

Leading e-retailers in India in 2015, ranked by e-commerce sales (in million USD)

Leading e-retailers in India 2015 StatistaThis statistic gives information on the web sales of the leading e-retailers in India in 2015. That year, India Times Shopping was ranked second with 300 million U.S. dollars in Indian e-commerce revenues.

FlipKart was ranked first with $325.96 million in web sales. Via

Rural India is driving e-commerce growth in the country half of all Indian internet users will be from rural areas in 2020, according to a recent article from The Boston Consulting Group (BCG).

The number of connected individuals in rural India is expected to grow from 120 million in 2015 to roughly 315 million by 2020, an average increase of 30% per year. Rural India accounts for two-thirds of the country’s population, or 807 million people, and their migration to the internet will be a driving force behind the country’s e-commerce growth.

India’s e-commerce economy is on pace to triple in size by 2020 to $200 billion. However, e-commerce activity in rural areas is still quite small. Only 15% of connected users in rural India use the internet to either research a product, purchase a product, or submit a product review, estimates BCG. Via

The Rising Connected Consumer in Rural India growth in Internet usage in rural India is a double-barreled game-changer, with up to 300 million Indian consumers expected to be online by 2020. While most of the focus to date has been on urban users, rural areas—which are home to two-thirds of the country’s population, or some 870 million people—are where much of the action will be for the rest of the decade. We expect that more than half of all new Internet users will come from rural communities and that rural users will constitute about half of all Indian Internet users in 2020. Cheaper mobile handsets, the spread of wireless data networks, and evolving consumer behaviors and preferences will all drive rural penetration and usage. They will both change how rural consumers interact with companies and give companies many more options for engaging with rural consumers.

As we observed last year in our article on the changing digital consumer in India, new users of all kinds will approach the online experience with very different expectations, needs, priorities, and goals. (See “The Changing Connected Consumer in India,” BCG article, April 2015.) Understanding the changes taking place in Internet adoption and use in India and how these shifts will affect existing markets and ways of communicating—and create entirely new ones—is essential for anyone doing business in the world’s second-most-populous country, which is also soon to be the world’s second-largest nation of connected consumers.

This article looks at the changes taking place in India’s rural communities. Our observations and insights are based on surveys conducted by the Center for Customer Insight (CCI) of approximately 4,000 rural consumers in 27 villages in 14 states in 2015 and 2016. The objective of the surveys was to better understand the rural Internet user and the nature and extent of digital influence on his or her buying decisions. Via

Army canteens most profitable retail chain in India, ahead of Future & Reliance Retail

Army CanteensMUMBAI: Which is the most profitable Retail chain in India? Answer: The defence canteen stores. Its earnings exceeded those of all other chains, including Future Retail and Reliance Retail. The Canteen Stores Department (CSD), which, incidentally, is a not-for-profit organisation, earned Rs 236 crore ($47.3M) during FY14-15, according to a Right to Information query. Comparatively, Avenue Supermart, which runs D’Mart stores, made a profit of Rs 211 crore ($39.1M) that year, Future Retail made Rs 153 ($28.3M) and Reliance Retail Rs 159 crore ($29.4M).

In terms of sales, too, CSD fared well, with its revenue of Rs 13,709 crore ($2.53B) trailing only Future Group and Reliance Retail. The CSD’s retail outlets sell 5,300 products ranging from biscuits and beer to shampoos and cars to 12 million consumers — personnel of the army, navy and air force, ex-servicemen and their families. Started in 1948, it is managed by the defence ministry and comprises 3,901unit-run canteens and 34 depots. It has more than 600 suppliers competing to provide a range of products including toiletries and cosmetics, household goods, footwear and accessories, food items, stationery, electronics and consumer durables, liquor and vehicles.

“CSD is definitely a critical channel. While we are not as focussed as we should be, there is a lot to be done to increase its contribution to our overall sales,” said Krishna Rao, deputy marketing manager at Parle Products. “They expect a higher margin so they can pass on the benefit to the end-consumer.” While vendor companies offer slightly better discounts to CSD than to local kiranas, products are still sold at very low prices because the government waives a substantial amount of taxes. Via

Ecommerce giants like Amazon, Flipkart trying out innovative ways to boost sales ahead of festive season Ecommerce marketplaces in India are trying out innovative ways to work around curbs on offering discounts as they prepare for the biggest shopping opportunity of the year in the upcoming festive season.

Amazon has decided to cut the commission it gets from some large and preferred sellers by 30-50% on the condition that the saving is passed on to consumers, according to executives from four large online sellers. Non-preferred sellers may have to bear the discount entirely, although the online marketplaces will help liquidate their old stock through promotions and prominent displays.

Flipkart and Snapdeal are coming up with a similar strategy, sellers on the two platforms said. They plan to offer credit to sellers, equivalent to the discount offered, a practice that’s common in offline trade. Via

Why are Make in India, Startup India Programs Vital for this B2B ECommerce Startup ex-Google employee Rahul Garg, conceptualized his startup in late 2014, he realized that the global trade of products was still operating in the old fashion, while the internet/ mobile, had led to democratization of the services and mobile app and advertising ecosystem.

His startup Moglix, is a B2B e-commerce platform, which specializes in B2B procurement of industrial products such as MROs, power tools, fasteners, electrical devices, industrial lubricants.

“The global trade had not evolved in last 10 years, as much as internet and mobile adoption had evolved across Asia since Alibaba’s early days from 1998-2005 in China. The cross-country trade runs in few trillion dollars and is still defunct with information asymmetry/ missing trust signals between suppliers and buyers, further accentuated by the friction in enabling services of logistics, customs, payments and data,” Rahul said. Via

These little exporters on online marketplaces are redefining India’s e-commerce revolution seller of homegrown fairness creams, tooth powder and herbal products hits upon huge demand in Russia, Israel and Turkey. Hospitals in Korea turn to a retired navy commander in Mumbai for dental products. A leather jacket maker in Dharavi ships his wares to London and New York. A German power company — how is that for a customer of auctioned imported goods? In the dingy corners of Mumbai, the nondescript localities of Delhi, the remote villages of Rajasthan and Gujarat, small businesses run from cramped spaces are slowly driving an e-commerce revolution.

India’s e-commerce story has largely centred on big players such as Flipkart, Paytm and Snapdeal. But a growing bunch of small businesses are laying down an equally compelling, if not more audacious, growth track by pushing e-commerce exports. They cater to discerning clients in abroad by listing products on online market places eBay and Amazon and then shipping them through logistics service providers like DHL Express.

SME exports on these platforms have grown 50%-70% from zilch in the past five years. “We have 25,000 plus exporters. Up to 68% of these are SMEs. From the confines of their homes, they sell to more than 239 countries through listings in 39 countries,” says Navin Mistry, head of retail exports and imports at eBay India.. Gopal Pillai, director, seller services at Amazon, says over 50% of the online market place’s 1 lakh active sellers are SMEs. Of these, over 12,000 sellers export 20 million to nine markets, including the US, Italy, and Japan. These sellers range from textile traders in south India to sellers of cattle products in Haryana. Look at it this way: the e-commerce boom has now spread to smaller towns. So much so that eBay has tied up with India Post for setting up its counters at 11 cities and towns in India. One of the towns is Bassi, Rajasthan whose residents are making a fortune selling gemstones after diversifying from their family occupation of farming. Amazon recently partnered the Union Ministry of Textiles to enable weavers in Kota in Rajasthan, Nadia in West Bengal, Bargarh in Odisha and Pochampally in Telangana to sell their products. Via

Next e-commerce market reviews

That’s it for our India report and update. In the weeks ahead, watch for reports on the Africa, China and US e-commerce markets. For easy updates, you can get our M-W-F morning news reports in your email by signing up at the top of this page. Enjoy your weekend!