Apr, 2015     

E-tailing Market Trends

In GMV run rate terms, the Indian e-tailing market reached $ 10.5 billion in size in March 2015; horizontal players captured majority of the share

E-tailing market segmentation

Overview, market sizes in $ billion

e-tailing market

Key insights

  • Horizontal players i.e. players selling products across verticals, dominate the e-tailing market
  • The major horizontal players Amazon, Snapdeal and Flipkart contribute ~75-80% of sales to the e-tailing market
  • Major verticals which vertical players operate in includes fashion, furniture and home furnishings, eye care products, healthcare products etc.
  • These niche players constitute a small share of the market currently, but are growing rapidly

Flipkart has a ~40% share of the Indian e-tailing market but is lagging behind its rivals Amazon and Snapdeal in terms of GMV growth

Market share of horizontals

As % of total e-tailing market

GMV Run-rate

Key drivers of Amazon India growth

  • Focus on developing the widest product selection coupled with aggressive discounting policies
  • High investment in and rapid expansion of Amazon Transportation Services network to enable a high degree of control over last mile delivery
  • Strong focus on customer and seller satisfaction and high investments in technology

Key drivers of Snapdeal growth

  • Focus on aggressively launching new and innovative categories including services
  • High marketing spends on celebrity endorsements and on discount burns
  • Strong focus on the mobile platform, which enabled it to grow the fastest amongst all e-tailers in Tier 2+ cities

Flipkart is lagging behind Amazon and Snapdeal in growing its seller count as well

Seller count for leading horizontals

Seller growth rates

Seller growth rates

  • Flipkart has a predominantly inventory based model through WS Retail which has prevented it from increasing selection/categories as rapidly as its competitors
  • Flipkart is now focusing on moving away from the WS Retail model gradually and hence its seller count is increasing
  • Snapdeal has been aggressively onboarding sellers across India by setting up regional offices and by targeting smaller sellers of niche product categories
  • Amazon has been onboarding sellers rapidly through a third party entity called Prione, which is a JV with Catamaran

Flipkart has the highest monthly cash burn of ~USD 60 Million; key cash burn areas across players are supply chain and marketing expenses

Player Cash Burns

USD Millions

Monthly Cash Burn March 2015

  • Supply chain costs hovers around 6-8% of GMV and account for a significant share of cash burn
  • Marketing spends of 3-5% of GMV and discounting spends of 10+% of GMV further increase cash burn across players

This document covers insights on the e-tailing market in India, covering the key strategies implemented by the players.