State of e-Commerce in India

A Research report by

for

September 2012

Honarable Minister Milinid De-

State of Ecommerce in India - Sept 2012

and e-Commerce are being conceptualized and run today. Social Media is gaining dominance in our and the citizens. We observe that most companies have a social media strategy in place and Cloud based

The roll out of 3G and 4G broadband services, the National Broadband Plan and much expected opening of the Retail Sector will certainly usher new business opportunities for e-Commerce in the country. I am happy to note that most of the leading e-Commerce companies are participating in the 2nd ASSOCHAM Conference on e-Commerce to deliberate upon the emerging opportunities in e-Commerce in the country. I thank the ComScore Team for this report and convey my good wishes for the success of this Conference.

D. S. Rawat, Secretary General

State of Ecommerce in India - Sept 2012

comScore Message

India is among the fastest growing online market and has registered a 41% growth in the last 12 months. Internet usage has reached almost 10% penetration in India. With this trend, e-Commerce has shown a very exciting growth trend among travel and retail sites. We expect a similar or even better growth in the coming years as more users come online through easier internet access and wider mobile internet penetration. comScore in India is the preferred partner for audience measurement for publishers, agencies and anyone who has a business online. I believe that the e-commerce report will help a lot of travel and retail players in tracking competition trends, e-commerce marketeers to harness the potential of various advertising channels and for investors to look deeper into the upcoming trends and potential opportunities. The report captures data on transactions, payment types, category retail and also consumer demographics for online purchase behavior. We will continue to add to the list more information on all key players in the market and growth trends across all sub-categories in Travel and Retail. We hope that this will be one of the most helpful reports in the industry. We sincerely thank ASSOCHAM for choosing us as a knowledge partner and giving us this opportunity to present our

Kedar Gavane, Director, comScore Inc.

State of Ecommerce in India - Sept 2012

Table of Contents
Global online growth trend India - Digital achieves critical mass Online Users : A Demographic study BRIC Nations - a comparison e-commerce : Global Trend Travel : A closer look Retail : A closer look 2 3 4 5 6 7 8 10 Future Trends 11

State of Ecommerce in India - Sept 2012

Global online growth trend

Internet usage globally has been on the rise with most of the growth has come from markets in Asia Pacific and Latin America. The chart below shows the growth in online population across regions from July 2011 to July 2012. The global online population as of July 2012 stands close to 1.5 billion users, growing at a rate of 7% Y-o-Y.

Unique Visitors (in millions) 7% 8%

574 617 370 399 206 Asia Pac Europe 213 120 15+ Age, Home and Work users Jul 11 Jul 12

3%

11%
134

11%
121 134

North America

Latin America

Middle East & Africa

the month of July 2012 stood at 134 million and grew from 120 million in July 2011. The online user growth has primarily been fueled with improved network infrastructure and growing need of online content consumption. With a growing user base, the engagement among online users has also grown in the last 12 months time spent has increased over 5.4% per visitor and pages viewedhas grown by 7% per visitor. The following diagram shows the increase in engagement among global users.

Time spent increased by 5.4%

Pages viewed grew by7%

Visits increased by 8.7%

*Data metrics per visitor (change between july 2011 and july 2012)

State of Ecommerce in India - Sept 2012

India - Digital achieves critical mass

The explosive growth in last 12 months has come from all categories and has also increased the engagement in terms of time spent and consumption has been on the rise. Even with an explosive growth, most of the categories in India are showing below average penetration compared to global usage patterns. The total internet user base in India (inclusive of shared devices and mobile) is at 124 million users in the month of July 2012. 1 out of every 10 Indians are online making it a 10% online user penetration in India.

Unique Visitors (in millions)

The chart above shows the total internet usage by two segments i. 15+ age, home and work users ii.Shared usage + mobile users + below 15 age group Non 15+age, home and work usage has been high in India with close to 50% user base accessing internet through shared devices and mobile. The time spent has increased by 33% with the user base spending 48 billion minutes online in a month. The consumption of content online has grown to 70 billion pages a month from 54.6 billion in July 2011.

State of Ecommerce in India - Sept 2012

Online Users : A Demographic study

With the growth of 41% online users, India has seen a growth across demographic segments.75% of total users between the age group of 15-34 years. In july 2012, the female population contributed to almost 40% of total users. The chart below shows a demographic segmentation based on age group and gender in India.

Demographic Profile of Online users(July 12)

With 75% of online audience between the age group of 15-34 years, India is one of the youngest online demographic globally. This is expected to be a continuing trend in coming years, given the age distribution in India. The age distribution has also contributed to consumption proportionally and its not surprising to see the growth among categories focussed on younger audiences in the last 12 months. Among the above age segments, 15-24 years of age group has been the fastest growing age segment online with user growth being contributed by both male and female segments. The top 5 popular categories accessed online are social networking, portals, search, entertainment and news sites.

State of Ecommerce in India - Sept 2012

BRIC Nations - A Comparison

Among the BRIC Nations, India has been the fastest growing market adding over 18 million internet users and growing at an annual rate of 41%. India is also among the top 3 fastest growing markets worldwide in the last 12 months.

Unique Visitors (in millions)

China added over 14 million users to reach 336 million internet users by the end of July 2012. Russia and India have shown similar trends in online usage patterns along with similarities in e-Commerce and payment types.

State of Ecommerce in India - Sept 2012

e-Commerce : Global Trend

e-commerce globally has been on the rise. Both travel and retail have grown faster than several other icategories in India. Travel visitation has an overall reach of close to 40% worldwide and has grown over 12% Y-o-Y. Retail visitation has an overall reach of close to 72% worldwide and has grown over 13% Y-o-Y. More than a billion people worldwide visit retail sites every month. In India, Travel has always been ahead of the curve in terms of visitation and transactions compared to world averages and is at 44% penetration and has grown over 41% from last year. Retail has grown 43% and reaches 60% penetration among online users, but is still below world averages. This shows the immense potential that the retail category holds in India with online retail filling the distribution and convenience gap. The ecosystem to support growth in online retail has also evolved including improvement in logistics and awareness among brands in making the prouducts available online.

% Reach : Travel
44

% Reach : Retail
72.3 59.9
Jul 2012

39
Jul 2012 Worlwide India

State of Ecommerce in India - Sept 2012

Travel : A closer look

Online travelhas seen growth across all subcategories including car rentals, Online Travel Agents, OTS Airlines as well as hotels and travel information sites. As the inter city migration has increased, a proportional upward trend is seen in usage of transport including Train, Air. The top 10 sites among the travel category show a good mix of travel options as well as information sites showing online users seeking information on travel options on a regular basis. 1 out of 5 online users in India visit the Indian Railways site.

% Reach: Top Travel Sites

Duplication among OTAs

Unduplicated audience 16.4% Indian Railways is also among the most visited sites in India with over 12 million unique visitors a month. There has been an strong overlap among the OTAs with a lot of consumers trying to compare travel options before purchase. The diagram above shows that the overlap in the category among the top 3 OTAs in India. MakeMyTrip, Yatra and Cleartrip individually reach over 11.6%, 8.3% and 3% of total online users respectively. But due to strong duplication among the OTAs the unduplicated reach among the top 3 OTAs is 16.4% of total internet users. The same trend is seen among travel information sites and travel data aggregators in India. The average transaction sizes among travel sites shows a gradation as below:

Average transaction size

State of Ecommerce in India - Sept 2012

Retail : A closer look

Retail category penetration has increased to 60% reach and has grown to 37.5 million unique visitors a month, an overall growth of 43% annually. The growth has come across all retail categories and most of them show promising transactions and conversion rates along with growth in visitors. The top retail sites shown above in India have each seen a growth of over 100% in the last 12 months.

Unique Visitors (in millions)

Retail 37.5 33.3 26.1 27.6 29

% Reach: Top Retail Sites

Amazon Flipkart Snapdeal Jabong Myntra Homeshop18 0 4 6.5 8 12 16 8.6 8.5 11.5 11.1 15.4

Jul 11 Oct 11

Jan 12 Apr 12

Jul 12

Reach % in Jul 2012

Amazon is the most visited retail site with most of the traffic slipt among Amazon.com, ImDB and Junglee.com. Flipkart leads the way among the online retailers in India with 7.4 million unique visitors a month, growing at 431% annually. Snapdeal has been close second with 6.9 million uniques. Jabong and Myntra have been competing closely in the lifestlye category with over 5.3 million uniques each. HomeShop18 has over 4 million uniques a month. Apparel has been the fastest growing subcategory in retail and reaches 13.4% online users in India. Comparison shopping, as research of retail online grows continue to dominate. Most of the

State of Ecommerce in India - Sept 2012

comparison shopping sites show a growth over 75% Y-o-Y and will continue to grow as more categories of retail come online. Travel category has shown this trend with high overlap among OTAs and this trend is expected among online retailers as well. Consumer goods, sports/outdoor products and retail food sub categories have also shown early growth signs. Consumer goods being a popular category among horizontal retailers is still way below global averages. Flowers/gifts/greetings is the only subcategory which has shown de-growth of over 33% in the last 12 months. Vertical e-Commerce categories including baby products, apparel, shoes and other lifestyle categories have also shown tremendous growth. Wider assortment and product availability have helped these retailers in growing business online. More retailers online have heavily depended on online marketing to scale. The online marketing spends across all content categories and effective marketing campaigns reaching out the right target audience have increased visitation and hence conversion among retailers. The average transaction sizes among some of the top retailers are as below:

Average transaction size

State of Ecommerce in India - Sept 2012

Payment type classification

Indian Payment Type Transaction Share, Q2 2012
Direct Debit 58%

Avg transaction size by Payment type

All Other PayPal Direct Debit American Express JCB

All Others 2% cash/COD 7%

$43 $178 $20 $110 $21 $33 $47 $48

Mastercard 12%

Cash/COD MasterCard Visa

Visa 21%

Average transaction size in India is $31

Direct debit is the most commonly used payment type contributing to over 58% of the overall payments in India. Cash on Delivery which has been a popular mode of payment method in retail category and form close to 7% of the total transactions. COD has a much higher contribution among retail category with more and more online retailers using this option to increase trials among customers. The average transaction size online in India across both Travel and Retail category is $31 between Apr - Jun 2012. This amount is set to increase with consumer confidence in buying higher priced products in the coming months. Among the payment types, American Express has the highest average bill value per transaction at $110 followed by Visa and

IRCTC direct debit breakup

ICICI 17% HDFC 14%

MasterCard. Direct debit average is low compared to COD average values as most of the direct debit transactions come from IRCTC. The adjacent pie chart shows the break up of direct debit payments in IRCTC. State Bank of India is the most popular direct debit option among train ticket buyers which ICICI and HDFC contributing to over 17% and 14% respectively.

SBI Debit 26% SBI 29%

PNB 5% AXIS Bank 5% Others 3%

State of Ecommerce in India - Sept 2012

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Future Trends
e-Commerce in India has grown rapidly across both travel and retail in the last 12 months and has shown an above average growth compared to many categories online. Retail growth has been fueled by several players getting funded, aggressive marketing and the consumer need and convenience to buy these products online. Travel e-commerce has been above global averages and continues to soar in terms of visitation and transactions. IRCTC has led the category with the largest transaction share and dollar share contribution. Airline, OTAs and hotels have seen steady growth and will remain as standard travel options for many consumers in the coming months. Car rentals and bus booking online have shows very high growth especially among urban consumers. With further penetration of the internet, these two categories will have a great amplified reach and conversion rates. Retail category has seen peculiar growth with a lot of retailers pushing for trials among consumers through discounts and freebies. This is a changing trend as consumers having tried online shopping, the credibility of these sites will further bolster the transaction volume on retail sites. Among all retail sites apparel and lifestyle goods have seen an early adoption among consumers. This again is a growing trend and we see a good amount of contribution in dollar share and transaction share coming from lifestyle categories along with home furnishing and lifestyle goods. Comparison shopping has been on a growth but is still underserved compared to global averages. The need to compare and consume in India across other online categories like travel, shows a similar consumer behavior in retail category. In the coming months, expect more and more consumers relying on online research of products for features and prices. Online retail has seen a heavy overlap with social networking and search due to aggressive marketing and strong inclination towards social commerce. We expect a larger portion of online retail from social commerce with India positioning itself as one of the fastest growing social networked user base and also larger size of social groups. To conclude, e-Commerce has seen tremendous growth in the last 12 months. Models like Cash on Delivery and other consumer centric payment options and improved service quality will boost overall sales. It is definitely the most exciting phase among online retailers and consumers as this learning curve will put India on the global map as one of the largest e-commerce markets in the coming months.

State of Ecommerce in India - Sept 2012

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About ASSOCHAM

ASSOCHAM acknowledged as Knowledge Chamber of India has emerged as a forceful, pro-active, effective and forward looking institution playing its role as acatalyst between the Government and

industry. ASSOCHAM renders its service to over 4,00,000 members which includes multinational companies, more than 400 Chambers and Trade Associations from all over India encompassing all sectors. ASSOCHAM has over 100 National Committees covering the entire gamut of economic activities in Corporate Social Responsibility, Environment & Safety, e-Commerce, Corporate Governance, Information Technology, Agriculture, Nanotechnology, Biotechnology, Defence, Cyber Security, Entertainment & Media, Pharmaceuticals, Telecom, Banking & Finance, Company Law, Corporate Finance, Economic and International Affairs, Tourism, Civil Aviation, Infrastructure, Energy Power, Education, Legal Reforms, Real Estate, Rural Development etc.. The Chamber has its international Business Chambers in more than 75 countries.

Mr. D. S. Rawat Secretary General ASSOCHAM Ph: 011-46550555 Email: d.s.rawat@assocham.com

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About comScore comScore is a global leader in measuring the digital world and the preferred source of digital marketing intelligence. Through a powerful combination of behavioral and survey insights, comScore mobile arena. comScore provides syndicated and custom solutions in online audience measurement, e-commerce, advertising, search, video and mobile and offers dedicated analysts with digital marketing and verticalcomScore for the industry-leading solutions needed to craft successful digital, marketing, sales, product development and trading strategies. comScore Digital Business Analytics provide following solutions:

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comScore Global Reach - 43 global markets

State of Ecommerce in India - Sept 2012 13

You

For India e-commerce queries : please contact kgavane@comscore.com aramaswamy@comscore.com

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Research Team
Kedar Gavane Andrea Jacobs Christian Lunoe