1.E-Tailing Insights in IndiaSince 2009 there is a sudden increase in the number of online shoppers. Thisdocument provides an insight to the same and the growing online shop providersCreated By: Jolsna R G

2. E-commerce In India Currently (2011-2012) Resembles The North American E-commerce Market In The Year 2000 E-Commerce known as electronic commerce in India iswitnessing an unprecedented growth since 2009. Not so longago (2003), internet users shared inhibitions abouttransacting online. E-bay, Wal-Mart shared apprehensionsabout starting online in India, in 2000 The evolvement has been gradual and the key reason for thegrowth of E-commerce in India has been the rising internetusers. While, the year 2000 witnessed 5 million users, year2004 witnessed a 3 fold raise in the number. In 2011, Indiacontributes 100 million internet users (Source: BusinessStandard).CHART 1 Women Internet users are less in India as compared to themales users This was the situation in Northern America in the year2000-2002 It was an e-commerce boom period in NA, thenIndia is eventually set to witness a high rate of womeninternet users (even online shoppers) The reason being: Out of the 36% working women inIndia (2011), only 11% of them use internet. 6% of thenon-working population and 2% housewives are theother set of population using internet. Online providers are tapping this lucrative market(rest of the non-internet user population) and tap themarket using the right channels (the slidesCHART 2further, describe the best channels) 3. Internet Usage In India (Sites Most Visited) Out of the 100 million internet users, 16 million visit news sites CHART 3 (comScore 2011) Retail segment and Travel occupy the next biggest share The most visited industry segments are as shown in Chart 3 Finance websites are gradually attracting the working population, because it is convenient an optionCHART 4 Although consumer goods sites are the most advertised and targeted sites, software download sites and the new releases demo sites are the occupy the largest share with respect to the number of visits 14 million users visit the online shopping sites, consumer sites and the various other e-tail sites regularly Online travel sites are the other set of sites commonly visitedCHART 5 With globalization, proximity with respect to geographical presence is not a concern Travel is made easy and convenient for users 19.4 million book online using the Indian railways site (largest share) Yatra Online, MakeMy Trip, Clear Trip who are best known as online providers for Flight bookings occupy the next best share 4. Internet Usage Market Trends 35% of the internet connection are below 256kbps (2011)Internet Connection The average Internet speed is 0.8 mbps (Source: Akamai Report) Speed Despite this low speed in connectivity, there are 100 million users in India. With the stepsto improve broadband connectivity, India will see a rapid growth in users There are 30 million online Indian users on Social networking sites and 20 million usersvisit these sites once everydaySocial Networking Sites Key Interest Facebook has 32 million Indian users and has grown to this number by 50%, whencompared to 2010 (Source: InternetworldStats) India is the 3rd largest country in terms of Facebook users Digital advertising constitutes to only 7% of the total ad spends as of 2011 (a rise of 4%Digital Advertising when compared to 2010)Spends With mobile advertising, and DTH advertising on the rise, the Digital Advertising spendswill see a continual rise There has been a huge investment on the 3G licenses. Due to which the better broadbandMobile Broadbandconnectivity along with handsets for low cost will witness an easy access to internet Usage iPads and Tablets are the next rising communication devices in demand. This will bring ahuge impact on the mobile-based purchases Mobile payments are still a concern. However with the current investment measures tobetter the system, mobile-based purchases will see a sudden growth 5. Segment Specific Market Trends Comparison Between Offline Buying Pattern AndOnline Buying AutomotivesRetail The untapped online marketHealthcare TechnologyProductsMedia &Travel Entertainment According to the Google estimates, out of the 100 million internet users, 40 million access internet via mobile phones and thereare 30 million app downloads in a week. This market is set to grow to 300 million by 2015 However some of the segment specific trends show a poor conversion of online buying. Online providers need to act on thebest marketing channels to tap the productive market 6. The Evolving Buying Channels Introduction Shoppers preferred a touch and feel andBrick & Mortar test features experience 2000 Physical Stores Drawback Not an easy and convenient option Economic deals and the features of each of the products were displayed in detail2003 Tele-shopping by the product owners Drawback Limited range of products Products available under a single roof2005Indian Shoppersand at competitive price points. The largest buying channel, currently Mall - Culture Drawback - Investment on commercial space does not allow a large discount in price points2007 The fast growing channel and the best discounts available channel. With the2009Online Shopping modernization and fast paced life, the buying channel is expected to grow Drawback Online payment, logistics and touch and feel experience features 2011 are the key issues 7. Online Buying, Importing, Selling & Exporting Market Trends India (2011) According to eBay India census 2011, there are 3,311 Ecommerce hubs in India E-Commerce Centers The urban areas in Maharashtra, New Delhi, Tamil Nadu, Karnataka, and Andhra Pradesh witnessed the maximum online transactions There are 1,267 non-metro cities Ecommerce hubs. 1:19 is the ratio of sales between rural and metropolitan cities respectively Although metropolitan cities contribute to the major share (51%) of the online sales, Tier 2 Tier 2 & 3 Cities & 3 cities hold a 40% share (which is a rising trend) and rural India (9%) Vivek Doraiswami, Founder & CEO of Zibika stated that The reason for the growth of Tier 2 & 3 cities is the unavailability of certain products in the physical stores / mall. Online shopping helps them own a product that is unique Cosmetics, Jewelry, Watches, Fashion and Fitness equipment are the favorites of theWomen Shoppers shoppers in this segment Lifestyle category is a fast and catching up trend. The key reason is the discounts available on unique and branded products This segment occupies the largest share in the online shopping wallet Electronic gadgets contribute to more than 50% of the online purchasesElectronic Gadgets and There are examples of purchases worth 75,000 and more made online (as stated by VivekBooks & Stationery Doraiswami, Zibika) Again, the key reason is the Tier 2 & 3 cities who are deprived of certain products inthe physical stores Although online selling in India is one of the rewarding market that is growing in trend, it is very important to state the rapidly growing retail exports Indian Retail Exports Indian market is exporting a variety of products to Ebay shoppers in 189 countries Key exports to - United States, United Kingdom, Australia, Canada & Germany 8. Online Service Providers In India Flipkart Positioned as the key provider of Electronic Gadgets, Books & StationeryPrivate LtdPositioned as the key provider of Group Deals (coupons) for events, experiential shoppingSnapdeal &(lifestyle, movies) Deals and youFashion andPositioned as the key provider of Branded Lifestyle productsYou(Apparel, Jewelry, Home Decor)Positioned as the key provider of Lifestyle products99Labels &(Apparel, Jewelry) Myntra Yatra Online, MakeMy Trip Positioned as the key provider of travel bookings (best deals on Air tickets)& Clear TripRedBus.in & Positioned as the key provider of travel bookings Bus & Railway Bookings, respectively IRCTC.co.inPositioned as the key provider of Local Business listingsJustDialPositioned as the key provider of Horizontal ClassifiedsQuickrPositioned as the key provider of Financial Services Policy Bazaar 9. E-commerce - Market Size (Across Various Products/ Services) According to the IAMAI report, Online Travel Market is the largest It occupies 81% of the market share and is expected to grow in the coming years The other markets occupy 20% of the share and is expected to grow exponentially in the next few years E-tailing Market that includes electronic products, home appliances, personal products such as apparels and jewelry and other accessories is worth Rs.2050 Cr. (over US$ 410 million) and is expected to grow by 32% in 2012 to Rs.2700 Cr. (over US$ 500 million) 10. Primary Research Online Shopping Trends & Identifying Key GrowthSectorsTo understand the online shopping behavior and beneficial product sectors. The number of respondents are a group of avid shoppers, occasional shoppers and do not prefer online shoppers They belong to the Metropolitan Cities in India. 11. Primary Research Conducted On Urban Areas, Entails Objective: To understand the Online Shopping Preferences and the Buying Patterns and thereby analyzing the key sectors of growth This Primary Research is conducted on the key metropolitan cities (New Delhi, Mumbai, Chennai, Bangalore & Hyderabad) It includes the working, non-working and household men &women in India It entails a quick comparison among the various E-tailing products and the shopping sites that are newly emerging E-bay and Amazon are still the primary shopping sites. Since 2009, there have been a sudden splurge of online shopping sites and some of them are the current favorites of several Indian shoppers/ users The products surveyed include: Electronics Books Apparels Geographical Location: India Music Home Linen & Dcor Time Period: February 2012 Accessories Beauty & Fitness Kitchen Appliances Furniture Travel & Leisure The research does not include the online travel industry data 12. Methodology A survey was conducted to know the preferences of the online shoppers/ users. Below were the objectives of the study The preferred online shopping sitesThe products that online buyers prefer the most? What arethey looking for?How often do these users visit the site? What do they like about the site and what additionally would they prefer?No. Of Survey Respondents: 189Male: 157 Female: 32Geographical Location: India 13. Use of Online Shopping Sites Out of 189 respondents, people who use online shopping websites were 172 The fear of shopping online has taken a back seat since 2009 Amazon and ebay are the most preferred sites among users. Apart from which, some of the newly emerging sites stood as shopper favorites Flipkart who are well known as a provider forBooks Stationery & Electronic appliances are themost preferred Around 131 people indicated their 131 userspreference for FlipkartSnapdeal who are better identified as the provider for discount coupons for events, spas & other experiential shopping services are the next 65 users preferred Around 65 people preferred to use Snapdeal33 users 33 users 29 users 29 users22 usersSome of the other sites (apart from the mentioned sites) used are: Indiashopping, rediff, timtara, zoomin, letsbuy (had more than 2 mentions) 14. What Do Customers Prefer While Shopping Online? Customers prefer easy accessibility of products Findings suggest that convenience is thekey reason to shop online As mentioned earlier, some of the shoppers place a constant watch on each of these online sites, the reason is Discounts Discounts are the second best feature to shop online However, some of the user mentions are that Not many products offer discounts. In that case, they prefer to buy certain products like Home linen & Dcor, Furniture and Kids wear at Brick & Mortar outlets Branded Products is another prime reason. However users prefer such products, only if it is tagged with discounts 15. Preferred Products Shopped OnlineProductsNo. ofusers Apparels 46 Bags & Accessories 42 Jewelry18 Home Linen & Dcor 14 Electronics136 Books & Stationery 105 For Kids 14 Furniture11 Kitchen Appliances 27.9 Travel & Leisure 59.5 Events & 31.5 Entertainment Beauty & Fitness 21 None at all11 Electronic appliances and other peripherals are the most commonly shopped products Books & Stationery stands second highest in online purchase Travel & leisure, Apparels, Bags & Accessories are the next preferences respectively 16. International Brands Over Domestic Brands Findings suggests that people are looking for an experience and they prefer brands that are not common in India 115 users preferred shopping for international brands as against 57 who do not prefer the same Most of them prefer to shop occasionally However, regular users (twice a week) are 43 in number out of 189 which is a large population The online market is gaining traction and findings suggest that shoppers constantly 71 users watch for updates on such sites 43 users32 users 11 users 18 users11 users 4 users 17. Site Drawbacks Flipkart, 99labels, Deals and You, Myntra has the most number of drawbacks stated Although Flipkart is the most preferred site, user mentions stated that there is no much discountsavailable when compared to the stores This could be a threat to Flipkart, if other competitors enter into the mainstream electronics andhome appliances market with better discounts Technical issues at the time of payment is a prime drawback. And the most common reason stated is, some of the card types are not accepted. The non-site issues include shipment, unavailable delivery to certain locations, and customer care related issues 18. Tier 2 & 3 Cities Market Watch Non-Metros play a vital role in the growth of e-commerce Reason: Big Brands do not open retail shops in non-metros and hence a void for Big Branded products is created While logistics is the biggest challenge in non-metros, Online Shopping is an easy and viable business model insuch cities Siddharth Puri, Senior Marketing Manager Fetise.com, an online shopping community for Men said, "Fetise get 500-700 orders a day on an average of which about 150-220 are from the non-metros.Online Shopping Provider% of Online Sales from their Total Salesin non-metro citiesValyoo Technologies 50%Fashos.com(online shoe store) 70%Greendust.com (Consumer Durables) 28% Google report In 2011, out of the total searches recorded in 2011, 70% of the search happened in non-metros Myntra, the largest online fashion store has partnered with Portland India Outdoor Advertising specifically to reach outto markets like Chandigarh, Lucknow and Pune as 50% of their overall sales volumes is contributed by these tier 2 cities 19. Rural India Market Watch Trends in Rural Buying Customers in the rural sector prefer to buy goods using the cash on delivery model Cash on Delivery Metro population buy goods online for convenience, rural population prefer onlineshopping due to unavailability of productsBranded products Customers in the rural area prefer online shopping for a key reason ( as the non-metros) Branded products that are not available at retail stores are rural market favoritesIncreasing InternetThe government of India is providing internet kiosks in villagesKiosks and Wi-FiOrganizations like Drishti and n-Logue have spread the use of kiosks Google will be soon providing internet service for this population It will include:Weather updates, information on agriculture trends, modern farming techniques, local information, railway timings and many others The biggest challenge in the rural area is logistics and distribution networks With this prevalent issue, online shopping providers are investing time and money in making the networks effective Myntra, Flipkart, Indiangiftsportal, 99labels, Bigshoebazaar.com, Snapdeal, Naaptol.com, Taggle.com, Timtara.com andmany other providers are investing in Tier-2 & Tier-3 cities and Rural marketsSource: TheEconomicTimes 2011 20. Product Sectors Rising Trend Some of the uncommon products bought online is as in the image provided The other products that was commonly bought by some of the cities were Cities Unique Products DelhiBody Art Products Bangalore &Rare coins & Notes Mumbai (Philanthropy) Jaipur Chocolates ChennaiWater Filters HyderabadFood-Storage Containers AhmedabadShower-gelsSource: ebay Census 21. Product Trends DelhiNortheastern States Digital Products Trends Some of the key trends witnessed in Delhi arerecorded (Gartner Report) Top 5 domestic goods bought by Delhi cityshoppers include Kurtis, 4GB Pen Drive, Digital Photo Frames, Bath & Shower Products and Antivirus software 51% Electronics goods and 38% lifestyle products are the highest Women shoppers buy cosmetics, jewelry, watches, fashion and fitness equipments mostly Top 5 goods imported in Delhi include Smart Phones, Indian CommonwealthStamps (due to the games season),Designer wrist watch, headsets andmens shoes The highlighted states and Sikkim preferred digital 61% lifestyle products stands the highest products over the others They waited for a period of 7-15 days to receive the latest iPhone version that to travel to Guwahati or Kolkata to buy a new one 22. Demographics TrendsThere is slowdown in traffic in March. The Flipkart.com reason could be a reduction in PPC budget buy books online is one of the search query that has got the maximum hits for this site The site visits are dominated by Men who are unmarried and in the age group 18-24, mostly 23. Demographics Trends Myntra.com has maintained its traffic on an Myntra.comupward trendMyntra is best positioned as an apparelprovider. buy t shirts online is one of the keysearch apart from myntra.comAs Flipkart.com, Myntras frequent customersbelong to the age group 18-24 24. Operations Logistics, Payments & Site Challenges 25. Operational Challenges - Logistics Logistics and Distribution network is one of the key challenges faced by Online providers For a B2B or a B2C customer, it is key to provide timely shipment It is key to meet the constant supply and demands of B2C customers1 ManufacturerDistributorOnline providerCustomerShipmentShipment Shipment2 Manufacturer Online providerCustomer ShipmentShipment3 ManufacturerCustomerShipmentShipment is the key challenge However with the disintermediation in the levels of communication, the price of the product/ service and theshipment information can be tackled But online providers are a medium of marketing and advertising and hence option 1 of the shipment channel worksbest in certain cases 26. Operational Challenges - Payment MethodsIndian consumers are concerned about security and payments e.g.: Subscribe to certain software sites to Pay-Online anduse their products onlineConsume Online e.g.: Products that range above 25KPay Offline Buy Online cannot be taken as cash payment due to Ite.g.: Products such as apparel and Consume and Consume issues. These goods (electronics, homeand accessories that are paid Offline Offlinedcor) have to be purchased online and delivered offlineand delivered off lineWith the payment concerns, websites have resorted to two different meansCash-on-Delivery modelDeal discounts and CouponsA trend of online payment is increasingly witnessed and according to e-bay census online shopping providers will witness a remarkable change in payment by 2016 27. Operational Challenges Website Experience The key to a website design is to reduce the number of steps for the user to select a product to the payment out page It is also very key to make the product selection page attractive Below are some of the key examples of the sites and how appealing it is to the customersFashion and you displays all its productseven if the homepage is long and has to bescrolled. Certain users prefer this detailedinfo right on the homepage Flipkart and Myntra have a similar website theme. Key products are listed in the homepage banner/ product highlight section 28. Investments E-tailing in India 29. Flipkart Has Changed Indias Online Shopping Market Success Story US$ 5 million sales is recorded by Flipkart dailyFlipkart Sales The growth rate is 100%, quarter on quarter 60 per cent of Flipkarts orders are cash or card on delivery Right from browsing to delivery, one can track their orders on the site Website Experience One can pre-order an unreleased book and get a good price as alerts Importantly, the discounts offered on books is the key to their success Bookstores receive 50-60% discounts from publishers, but the overheads reduce theoption to keep a low margin on the books Product growth With this low overhead advantage, Flipkart is able to over huge discounts The company has grown to offer 11.5 million titles (largest book retailer in India) Flipkart started with books and now offers 12 product categoriesMarketing and The company is investing on online and offline ad campaigns Advertising This is to not only convert the internet savvy population but also the retail shoppingcustomers Sanjay Bhansal, CEO of Flipkart believes a 10 fold increase in the customer base Flipkart is entering the Digital Media market AcquisitionFlipkart acquired Mallers Inc, (Mime 360) to enter the music industry (CDs, DVDs ) Flipkart also acquired LetsBuy, provider of electronic gadgetsWith this acquisition Letsbuys US$6 million share is owned by Flipkart making them the not only the market leaders but eliminating one big threat 30. Appendix 31. E-Commerce - Business Chart E-Commerce Business Unit Quadrant 1 - when business Business Quadrant 2 - when an agent or and operations are handled by a distribution network is Manufacturer to reach out to contacted to manage logistics customers Distribution ManufacturerNetwork TechnicalOperations OutsourcingOnline Shopping Operations Provider Quadrant 4 - when the manufacturer outsources theQuadrant 3 - when a e-tailer logistics operations and marketing.manages the marketing show In some cases a franchisee of the Innovation for the manufacturer manufacturing unit is also provided 32. Online Service Provider Key To Efficient BusinessTechnologyOffer Site ExperienceOffer Secure Payment Updating ofmethodology Inventory CustomerOrderInfoTrackingTrackingfeaturesBackend Provideintegrationautomatic with Supplieralertssystems Customer NewslettersFeedback and productSatisfactionbrochures survey Provide product news to customers based on past behavior Business