Oct, 2018     

E-tailing Market Updates


Online retail shall become a USD 50 Bn by 2020  and the growth will come from Type B shoppers who are expected to become a USD 15-30 Bn opportunity by 2020

 

Published on: Oct 2018   


E-tailers have slowed down the thrust on increasing the seller base

 

Published on: Jul 2018

Leading industry players have stopped the push towards increasing the seller base in the past few years. And are now focussing on growing business from the existing seller base. This helps them have a good control on the sellers to ensure the right products are getting delivered to the consumers.

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Rapid growth in internet and smartphone users will lead to an increase in online shoppers

 

Published on: Jul 2018

The Indian consumers are becoming more digital savvy with each day. With the increase in smartphone penetration and reducing data prices more and more consumers are coming online. The e-tailers are also investing heavily to ensure they provide a good end-to-end experience. The combined effect of these two will lead to an increase in the number of online shoppers.

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Rapid growth in digitally savvy users will lead to doubling of e-tailing share as a percentage of total retail

 

Published on: Jun 2018

The Indian consumers are becoming more digital savvy with each day. Reducing data prices and increasing smartphone penetration is leading to an increase in the data consumption per user. On the other hand, e-tailers are focussing on providing good end-to-end consumer experience. And hence, we expect the combined effect of these two will lead to an increase in the share of e-tailing market.

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Industry to have 4.9 mn daily shipments by 2020

 

Published on: Jun 2018

The e-tailing industry had 1.8 mn daily shipments in 2017. The industry is expected to witness a 40% Y-o-Y growth powered by the increasing penetration in T2 cities coupled with emerging segments such as cosmetics and appliances in metros and T1 cities. We hence expect the daily shipments of the industry to reach 4.9 mn by 2020.

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Increase in frequency of buying along with online shoppers across the categories will drive the industry growth

 

Published on: Jun 2018

The e-tailing industry is expected to witness a 40% CAGR to become a $50 bn market by 2020. Two key factors contributing to this growth would be increase in the number of shoppers and increase in frequency of buying online. The no. of shoppers are expected to increase with the shift in focus of e-tailers towards Tier-II+ cities. Increased online penetration of smaller categories with higher frequency of purchase will make the consumers more habituated with the platforms.

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Online Grocery is expected to be one of the fastest growing category reaching ~4 Bn in 2020

 

Published on: May 2018

Online grocery and FMCG is the next key category of focus for all the large e-tailers. Online grocery habituates the consumer with frequent purchase thus ensuring the consumers are more accustomed to shopping from the e-tailers. The e-tailers are hence focussing big time on this category. The large verticals on the other hand are growing at a rapid pace. Hence, we expect this category to reach $4 bn by 2020.

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Indian e-commerce Industry has two-fold challenge of “Less people buying” and “People buying less”

 

Published on: May 2018

India has one of the lowest online shopper penetration in comparison to other countries which signifies that a small share of internet users is buying online. However, the penetration in metro and tier-1 cities is growing at a faster pace than tier-II cities. Also, the annual spend per shopper on online shopping is still very low in comparison to US and China. This is not so much a sign of worry as Indian e-commerce is on a growth phase and the new consumer coming to the platforms, shops for lower price standardized products. We feel going forward the online shopper penetration will increase and the e-tailer will be able to provide a good experience resulting in the consumer buying more.

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While purchasing experience is satisfactory, delivery and post delivery experience (esp. customer support) needs improvement

 

Published on: Apr 2018

The Indian e-tailing consumers are quite satisfied with the purchase experience and we have seen this improve over time. However, the post purchase experience comprising of delivery, returns, customer support and refund days still remains an area of concern. The e-tailers are thus continuously investing in expanding their supply chain capabilities and reach to improve the post delivery consumer experience.

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Mobile is winning the war against desktop with mobile (App + Web) accounting for 70% of GMV sales

 

Published on: Apr 2018

The Indian e-tailing consumers are getting more and more habituated with ordering through mobile phones. The share of GMV ordered via apps and mobile websites accounted for nearly 70% in 2017. This was powered by increasing usage of smartphones in India and falling rates of data due to the effect of players like Jio. We feel this trend would continue; as new set of consumers who would be arriving in the platform would largely be from Tiet 2+ cities who would be using mobile phones primarily to place the order.

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COD is expected to remain stagnant at ~50% as the focus of the industry shifts to Tier-II+ cities

 

Published on: Mar 2018

The share of COD which was impacted due to demonetisation and stabilized post it is expected to remain stagnant. Though there has been an increase in the adoption of digital payments, there has also been a shift of focus of e-tailers towards the Tier-II+ cities. These two situations are set to cancel out the effect of each other resulting in the share of COD being stagnant.

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The industry has more than 30% returns and cancellations

 

Published on: Mar 2018

The e-tailing industry is dominated by high returns and cancellations with the difference between shipped and fulfilled GMV being more than 30%. Fashion category has the highest cancellations and returns while mobile and appliances has the least. We feel the industry needs to focus on ensuring the right products get delivered as 30% is good amount of revenue to be lost.

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Inventory share is expected to increase to 70% by 2020 driven by large horizontals which are majorly inventory led

 

Published on: Mar 2018

The e-tailing industry is expected to move more and more towards the inventory led models. With the horizontals majorly driving growth. The horizontals have realized that in order to control the overall consumer experience it is imperative to have their own inventory. The reliance on marketplace model is hence going to decline going ahead.

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Paid ads generating multifold revenues for online sellers

 

Published on: Mar 2018

Sellers of e-tailing industry are eventually choosing the option of paid ads over other traditional methods. 83% retailers confirmed revenue hikes using the sponsored content. With such a high impact, these services are turning out to be a new area of exploring business profits for the e-tailing players.

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FMCG is the highest growth potential category while mobiles and large appliances have fairly higher penetration

 

Published on: Mar 2018

The e-tailing industry currently has the highest penetration of mobile and large appliances. This is driven by behaviour of users buying standardized products with reliable delivery experience. FMCG which currently has the lowest penetration is a key growth category for the players and is expected to have a higher growth in 2018.

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E-tailing GMV growth is driven by strong growth of mobile category

 

Published on: Feb 2018

The e-tailing GMV is driven by the strong performance of mobile and electronics which has seen a 45-50% increase from last year. Although FMCG has seen the highest growth, they contribute just 6% to the overall GMV of the industry. We feel going forward electronics would be the category driving growth for the industry.

GMV growth Etailing India


Tier-II+ cities is expected to have 50 Mn+ online shoppers in 2018

 

Published on: Feb 2018

The e-tailing industry is currently witnessing Tier II+ cities as the fastest growing market. The industry added 10 Mn shoppers in 2017, expected to add 19 Mn more in 2018. Followed by Tier I cities which added 3 Mn shoppers in 2017, expected to add 4 Mn more in 2018.

Unique shoppers in tier 2 cities Etailing India


30 sale days contributed ~30% of the annual GMV in 2017

 

Published on: Feb 2018

The Indian e-tailing industry is flat-out sale driven. Sale days are just 10% of the year and account for ~30% of the annual GMV. We saw an increase of ~30% in the average order value and ~200% in the number of daily transactions during this period. Sale days work as a good anchor to bring new customers to the platform and inculcate the habit of buying online.

Etailing India GMV sale vs Non-sale


The industry touches ~ USD 20 bn in OND-17

 

Published on: Feb 2018

The e-tailing industry had a very positive OND-quarter with the GMV touching nearly USD 20 Bn, primarily driven by the increase in the number of shoppers from T2+ cities. Going forward we feel that these new shoppers who have found value in online shopping will continue to shop online and more new users who have come online powered by Jio will adopt online shopping.

 

                                                       E-tailing Q-o-Q Annualized GMV (USD bn)

Etailing annual GMV


Tier-II+ online shopper population is the growth driver for e-tailing – growing 3X faster then metros

 

Published on: Jan 2018

E-tailing industry saw a rapid increase in the number of shoppers in T2+ cities in 2017 contributing nearly 41% of the overall online shoppers in 2017. This is going to be the significant lever for the growth of e-tailers in Indian market in 2018 as well.

 

                  % Growth in number of unique shoppers from 2016 to 2017

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E-tailers on track to record their biggest quarter ever in Q3 CY17- which should push industry size to USD 17+ Bn for CY17 as a whole

 

Published on: Jan 2018

Driven by a very strong e-tailing festive sales in Sep’17, with USD 1.5 Bn of sales generated over 5 days, e-tailers are likely to see 45% y-o-y growth in Q3 CY17. Which should put industry on track to grow 20% y-o-y for the whole of CY17- a marked improved from the slowdown recorded in CY16.

 

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CY-Q2 brought the much-needed cheer in Indian e-commerce industry, with healthy double digit growth

 

Published on: Jan 2018

Fashion, a key underrepresented category, contributed in the biggest way. The no. of shipped units for Q2 CY’17 reaching the level of Q4 CY’16 (festive quarter).

 

                                   E-tailing Industry, Total Shipped Units

            (For each quarter in the calendar year, post-cancellation, millions)

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Y-o-Y growth for e-tailing sector is likely to pick up in AMJ’17 vs previous quarter, on the back of multiple successful sale events

 

Published on: Jan 2018

While Y-o-Y growth remained muted in the JFM’17 quarter, the AMJ’17 quarter is likely to see a positive uptick, driven by the impact of successful sales events. Mobiles category has been an especially important sales driver, but sector’s increasing dependence on the same is a point of concern.

 

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With orders getting delivered faster than ever before, online shoppers have never had it so good

 

Published on: Jan 2018

E-tailers have brought down average delivery times (pan-India) to just above four days, with more than 18% orders getting delivered within two days of ordering itself. And the delivery speed differences across players are consistently coming down- thus ensuring a highly reliable experience as a customer.

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Flipkart has the highest share of big-spending online shoppers on its platform

 

Published on: Jan 2018

Flipkart’s strong focus on high-value categories like mobiles and large goods has enabled it to have the highest % high-spending shoppers on its platform-something which also speaks volumes about the high trust placed on its platform by consumers.

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Where are the promised volumes?

Y-o-y volumes growth in JFM’2017 has been negligible: The industry started at y-o-y volumes growth of <5% in the past quarter, clearly outlining the lack of success in increasing the monthly active shopper count beyond 15-17 Mn.

Lack of volume growth coincides with failure to push through high-volume categories: Volume share of categories such as fashion and FMCG has been steadily declining, from 48% in JFM’16 to 45% in JFM’17.  This is in spite of aggressive marketing efforts by players to drive sales – indicating the challenges involved in shifting the primarily offline customers in these categories to online channels.

Driving sales of high volume categories in 2017 will require e-tailers to solve key issues of potential online shoppers: RedSeer research shows that potential consumers of online fashion are discouraged to shop online by perceived pain points like –

1) Poor product quality

2) Inability find suitable designs and

3) Inaccurate listings leading to wrong product being delivered.

Sustained recovery or false start?

The industry continues its slow and steady recovery in 2017: With an average GMV run rate at USD 14 Bn in Jan/Feb 2017, 5% higher vs slump period of H1-2016, the industry seems to be on the (slow) path to recovery.

Smartphones are the architect of the recovery: Smartphones accounted for 53% of industry GMV in Jan/Feb 2017, higher than 49% share seen during most of the CY2016. The regular launch of exclusives continues to whet the Indian consumer’s seemingly insatiable appetite for smartphones, thus driving the market.

However, a smartphone-driven recovery may not be very sustainable in longer term: Even as smartphone dependence increased, GMV share of high volume, high repeat categories like fashion and FMCG continues to remain flat in 2017, at 22% and ~3%. Lack of growth in such categories may point to deeper problems in onboarding new customers and thus create a sustainably growing GMV base.

 

 

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