E-commerce in India
has an internet users base of about 475 million as of July 2019, about 40% of the population. This number is expected to be 627 million by the end of 2019. Despite being the second-largest user base in world, only behind China, the penetration of e-commerce is low compared to markets like the United States, or France, but is growing, adding around 6 million new entrants every month. The industry consensus is that growth is at an inflection point.
In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities. Demand for international consumer products is growing faster than in-country supply from authorised distributors and e-commerce offerings. Long tail business strategy allows companies to realize significant profits by selling low volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items. The term was first coined in 2004 by Chris Anderson.
In 2017, the largest e-commerce companies in India were Flipkart, Snapdeal and Amazon. In 2018, Amazon beat Flipkart and was recorded the biggest ecommerce in india in terms of revenue.
Market size and growth
2009
India's e-commerce market was worth about $3.9 billion in 2009.2011
As per "India Goes Digital", a report by Avendus Capital, the Indian e-commerce market is estimated at ₹28,500 Crore for the year 2011. Online travel constitutes a sizable portion of this market today. Online travel market in India had a growth rate of 22% over the next 4 years and reach ₹54,800 crore in size by 2015. Indian e-tailing industry is estimated at ₹3,600 crore in 2011 and estimated to grow to ₹53,000 crore in 2015.2013
The market went up to $12.6 billion in 2013. In 2013, the e-retail segment was worth US$2.3 billion. About 79% of India's e-commerce market was travel related in 2013.2014
According to Google India, there were 35 million online shoppers in India in 2014 Q1 and was expected to cross 100 million mark by end of year 2016. CAGR vis-à-vis a global growth rate of 8–10%. Electronics and Apparel are the biggest categories in terms of sales.2015
Overall e-commerce market had reached ₹1,07,800 crores by the year 2015 with both online travel and e-tailing contributing equally. Another big segment in e-commerce is mobile/DTH recharge with nearly 1 million transactions daily by operator websites.2016
2016 also saw online sales of luxury products like jewellery also increased. Most of the retail brands have also started entering into the market and they expect at least 20% sales through online in next 2–3 years. According to Google India Research in 2016, by 2021 India is expected to generate $100 billion online retail revenue out of which $35 billion will be through fashion e-commerce.2017
The ecommerce industry was reported at $24 billion in 2017 and was recognised as the fastest growing industry in India.2018
The ecommerce market grew to $38.5 billion in 2018.2019
It is estimated that one in every three Indian shops via smartphone and online retailers deliver to 20,000 pincodes out of the 100,000 pincodes in India.Closures
Though the sector has witnessed tremendous growth and is expected to grow, many e-commerce ventures have faced tremendous pressure to ensure cash flows. But it has not worked out for all the e-commerce websites. Many of them like Dhingana, IndiaPlaza.in, eBay-India, Rock.in, Seventy MM amongst others had to close down or change their business models to survive.In March 2020, the Government of India restricted online sales of all goods except for critical items including food, pharmaceuticals, and medical equipment. Many indian startups including Urban Company, BookMyShow, Pepperfry.com and Nykaa, which do not feature in the government’s list of notified essential services, are running at a loss due to Covid-19 pandemic.
Collaborations
In light of the Covid-19 pandemic, the Indian government issued a directive to stop delivery of non-essential items by e-commerce platforms. This led to many e-commerce platforms to collaborate and sell essential goods. For e.g. Myntra partnered with Wildcraft to sell protective face masks. McCoy Mart partnered with Rossari Biotech Ltd to sell hand sanitizers. Flipkart partnered with Uber for last mile delivery of essentials to its customers.Infrastructure
There are many hosting companies working in India, some of which offer SaaS for hosting web stores.India has got its own version of Cyber Monday known as Great Online Shopping Festival which started in December 2012, when Google India partnered with e-commerce companies including Flipkart, HomeShop18, Snapdeal, Indiatimes shopping and Makemytrip. "Cyber Monday" is a term coined in the US for the Monday coming after Black Friday, which is the Friday after Thanksgiving Day. Most recent GOSF Great Online Shopping Festival was held during Dec, 2018.
In early June 2013, Amazon.com launched their Amazon India marketplace without any marketing campaigns. In July 2014, Amazon had said it will invest $2 billion in India to expand the business, after its largest Indian rival, Flipkart announced $1 billion in funding. In June 2016, Amazon agreed to invest another $3 billion to further pressure rivals Flipkart & Snapdeal Amazon has also entered grocery segment with its Kirana now in Bangalore and is also planning to enter in various other cities like Delhi, Mumbai and Chennai and faces stiff competition with Indian startups. A large proportion of traffic towards e-commerce sites is driven by coupon sites.
Funding
Examples of venture capital firms having invested in e-commerce companies in India are as follows:Flipkart.com raised about USD 2.3 billion. On 10 July 2013, Flipkart announced it had received $200 million from existing investors Tiger Global, Naspers, Accel Partners, and ICONIQ Capital, and an additional $160 million from Dragoneer Investment Group, Morgan Stanley Wealth Management, Sofina, Vulcan Inc. and more from Tiger Global.
In February 2014, online fashion retailer Myntra.com raised $50 million from a group of investors led by Premji Invest, the investment company floated by Azim Premji, Chairman of Wipro. May 2014 also witnessed an acquisition of Myntra by Flipkart reportedly for ₹2,000 crores.
In September 2015, PepperTap raised $36 million from Snapdeal and others.
In July 2020, Purplle raised $30 million from Goldman Sachs and others.
Niche retailers
The spread of e-commerce has led to the rise of several niche players who largely specialize their products around a specific theme. As many as 1,06,086 websites are registered daily and more than 25% are for niche businesses.During 2014, Royal Enfield sold 200 bikes of special series Online.
Online apparel is one of the more popular verticals, which along with computers and consumer electronics make up 42% of the total retail e-commerce sales. Niche online merchandising brands like Headbanger's Merch, Redwolf and No Nasties partner with and even help sustain independent musicians. Some established brands like Arvind are now creating clothing lines just for the e-commerce markets. Some of the bigger online retailer like VoxPop Clothing have secured multiple rounds of funding, the last round raising $1 million from Blume Ventures in 2014.
As these niche businesses get popular, they are slowly getting acquired by the big players. BabyOye was acquired by Mahindra Retail, part of the $17 billion Mahindra Group. Ekstop was acquired by the Godrej Group to complement their offline chain of Nature's Basket stores.
Mergers and acquisitions
According to a report by Grant Thronton, as much as US$2.1 billion worth of mergers and acquisitions were inked in 2017 in the booming Indian e-commerce industry. Here is the list of Mergers & Acquisitions which happened in India over a period of time:| Date | Merger/Acquisition | Companies Involved | Cost | Refs |
| May 2014 | Acquisition | Flipkart acquires Myntra | US$300 million | |
| March 2015 | Acquisition | Snapdeal acquires Unicommerce | Undisclosed | |
| April 2015 | Acquisition | Snapdeal acquires FreeCharge | US$400 million | |
| April 2016 | Acquisition | Flipkart acquires PhonePe | Undisclosed | |
| June 2016 | Acquisition | Myntra acquires Jabong | US$70 million | |
| July 2017 | Acquisition | Axis Bank acquires FreeCharge | US$60 million | |
| May 2018 | Acquisition | Walmart acquires Flipkart | US$16 billion | |
| January 2020 | Acquisition | Zomato acquires Uber Eats | US$350 million |