Dec, 2016     

E-tailing Industry Insights from Q4 CY16


Indian market e-tailing Trends

Trend 1: Amazon is growing aggressively and has reached ~80% of
Flipkart's GMV

  • Strong growth driven by fashion category, which is again 80+% of Flipkart. Amazon expects to surpass Flipkart in this category in 6 months. Fashion growth driven by aggressive advertising, fashion show promotions and increased assortment made possible by rapid seller onboarding in this category. Private label launch planned under
    Cloudtail
  • Seller programs like Seller flex and Amazon tatkal helping drive up seller count to 110,000
  • Cloudtail share continues to be 40+%
  • Swift delivery, and consequently high customer satisfaction made possible by FBA, which accounted for 80% GMV for month

Trend 2: Players are taking multiple measures to reduce burn

  • Snapdeal fired ~15% employees across key functions
  • Flipkart is reducing seller protection fund liability on itself
  • Flipkart is changing warehousing norms to charge sellers extra for the same
  • Discounting/cashbacks cut down heavily across PayTM, Snapdeal and Flipkart

Trend 3: Fall in the Marketplace GMVs of Snapdeal

  • Snapdeal GMV fell 30% vs December
  • Caused by heavy reduction is cashbacks/discounting spend, especially in key categories like mobiles (which fell to
  • The impact of cost cutting is so severe that they have also stopped excess expenditure on the warehousing and operations which is needed for smooth functioning. For eg. Snapdeal has delayed the spending on expansion of the warehouses, thus ending up with insufficient storage space.

Trend 4: PayTM has reduced marketplace cashbacks; however it continues to invest in supply chain infra and on other verticals

  • PayTM's GMV fell 20%
  • Caused by heavy reduction is cashbacks/discounting spend
  • However, PayTM continues to invest in cashbacks for its other verticals like travel
  • Paytm also continues to invest heavily in marketplace infra- it launched multiple FCs recently (15+ now)

Trend 5: Downsizing of captive sellers likely; aggressive seller count growth is no longer a focus for Snapdeal and Flipkart

  • Flipkart is likely to shift WSR sales to a group of large 5-10 sellers to comply with new govt. norms
  • It has also reduced aggressively on-boarding new marketplace sellers, focusing on growing sales of existing sellers
  • Snapdeal is also currently not planning to increase the number of sellers, rather they are focusing on increasing the revenue contribution per seller. Their target for the current quarter is to have at least 20000 sellers who generate a revenue of at least INR 1 lac consistently for 2-3 months.

 

This document covers the keys trends of the e-tailing industry in Q4 calendar year 2016. It includes the key strategies implemented by the player in e-tailing space.