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Inut t o D
SHOES & ACCESSORIES / october 2012
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E-commerce is growing at 35-40 per cent CAGR. Consumption trends across the country indicate it could be poised for a boom, but not without its concomitant bust and consolidation story. What are the synergies expected especially following the explicit policy declaration barring FDI in e-commerce? Bhavya Misra explores
Ahmedabad. Founder and Chairman of Shopnineteen.000+ SKUs of shoes on the website ▶ 200+ footwear brands ▶ 100+ accessory brands Jabong ▶ Footwear is the largest and most popular category followed by clothing and accessories ▶ Sells the maximum number of footwear online every single day to over 480 cities. Fastrack Most selling footwear brands: Reebok.5bn.com. ‘Trends in India’s eCommerce’ states. The online retail market stands at around `3. Pune. A piece of footwear sells every 33 minutes. Ernakulum. • Retail trading. But. by means of e-commerce. Total manpower: 100 | Customer service & business development teams: Outsourced Technology & supply chain partners: Inhouse team of global technology experts Stop Press: Government Notification • Retail trading. Jaipur. Reebok.” says Ashutosh Lawania. Cochin Yebhi ▶ 10. Puma. Pune.” “India is one of the fastest growing internet markets in the world and is currently at 120 million. in any form. It is expected to touch 300 million by 2015. sehr hellem Untergrun ▶ ▶ ▶ ▶ A pair of footwear sells every 33 minutes A piece of jewellery sells every 3 minutes A watch sells every 7 minutes Ebay India has over 3 million registered users from 3. october 2012 / SHOES & ACCESSORIES 67 .000 listings in shoes & accessories live on eBay India presently. Jaipur. Online apparel contribution is anticipated at 30 per cent to this figure which would mean somewhere close to US$2. Jaipur. Chandigarh. While US$8. Guwahati and Chandigarh Myntra ▶ 25-35 pairs of footwear sold per day ▶ Top 10 non-metro cities (including Bangalore) which generate maximum orders are Hyderabad. dresses.com states.000 crore and is growing at an annual rate of 35 per cent. jumping from US$1. Reebok. Hyderabad. “E-commerce revenues in India will increase by more than five times by 2016.8 billion is still less than other countries in Asia-Pacific. but not without its concomitant bust and consolidation story. this is only the tip of the iceberg. would not be permissible.6 billion in 2012 to US$8. engaged in the activity of multibrand retail trading. Ebay Top 10 brands that receive max traffic on eBay: Bata. A recent report by Forrester Research. Ernakulam. ▶ Retails over 500 footwear and accessory brands ▶ Top non-metro cities (apart from Bangalore) which generate maximum orders are Hyderabad. Yepme The aforementioned pointers indicate the reach and increasing popularity of e-commerce. for companies with FDI. for companies with FDI. engaged in the activity of singlebrand or multibrand retail trading. by means of e-commerce. in any form.8 billion in 2016. There is a big question mark on whether e-commerce sites are actually making money. shoes. Ahmedabad.” However attempts to elicit response from the players quoted hereafter remained futile. Puma Total nos of footwear & accessory listings: More than 38.311 cities covering all 28 states and 7 Union Territories Ebay ▶ Top 5 non-metro cities which generate maximum orders are Shillong. “Considering the participation of small towns in the big consumption story of India. belts Shopnineteen ▶ Receive orders from more than 580 cities across the country. I anticipate a growth of around five times from 2012 to 2016 in e-commerce space which would mean a projected revenue of more than $8bn with a CAGR of 57 per cent. in any form. engaged in the activity of singlebrand retail trading. Puma. by means of e-commerce. Co-Founder & Head-Sales and Marketing at Myntra. for companies with FDI.” Gobind Singh Pahwa. tops. increasing urge to find better value for money products and lack of infrastructure and financial support to mainstream retail channel (offline).Anwendung auf dunklem Untergrund Anwendung auf weißem bzw. would not be permissible. According to Assocham. Guwahati and Chandigarh ▶ Top five most selling categories in nonmetros are jewellery. India’s CAGR is much higher than any other country that we forecast in the region. such as China and Japan. Fastrack. Ray Ban Brands most searched on eBay: Ray Ban. Bata. the market size of online retail in India is likely to touch `7. E-tailing in the country is poised for a boom. would not be permissible. which was incepted in 2007. com was founded in March this year.000 crore by 2015 owing to increasing internet penetration. Shopnineteen. The pitch actually turned queer following the government notification that “retail trading.
“A number of players have entered the Indian e-commerce space even though it is a volatile market as consumer preferences are changing on an everyday basis. while substantially smaller than more mature online retail markets such as Brazil and China.com. “E-commerce is one of the hottest and fastest growing industries in the country today and has generated a lot of attention. Having said that. CEO of Bigshoebazaar. “The e-commerce space in India will see consolidation with emergence of few giants and several niche portals catering to specific needs and consumer base.com corroborates Lawania: “The e-commerce space in India is at a very nascent stage currently.” Lawania says. With internet population expected to grow from current 100-120 million to 300-400 million users in next 4-5 years. Investors are closely tracking this industry and will be keen to partner with companies that have a strong business model in place. The right approach will be to sustain consumer interest in order to maintain the investment attractiveness of this market. how many of these players are actually looking at a prospective organic or inorganic growth? Lawania states. the honeymoon phase is over. India is on par with other early stage e-commerce markets such as Mexico. While it is too soon to comment on the M&A scenario in e-commerce. “From the point of view of investments. I believe.com and Yebhi.” says Pahwa of Shopnineteen. Being a new entrant we have witnessed tremendous growth in a very short span of time. Accel Partners.com states. “Myntra has received three rounds of funding so far totaling upto $40 million from Tiger Global.” Investments. being selective on the medium that you choose and adopting innovative and creative strategies is the key. for example. e-commerce is expected to grow exponentially. Indo US and IDG.” .LEAD FEATURE E-Commerce Bagskart Shopnineteen Mukul Jain.” the report adds. we expect consolidation in the market in the next 10-12 months as most of them will not make it big. India will remain attractive from an investment point of view as the consumer market is huge and is nowhere close to saturation point. and with increasing share on online shoppers within this population. we are open to inorganic growth opportunities.” Pics: Shopnineteen Growth story Having said that. “In 2011. Manmohan Aggarwal. managing director of Jabong.” “From a revenue perspective. Investors are no more investing in every second venture and laying a strong emphasis on a sustaining business model with adorable passion to make it successful. Almost 15-20 new e-commerce firms are setting up shop every alternate month. mergers & acquisitions According to the Forrester research report. venture capitalists invested US$177 million in 68 SHOES & ACCESSORIES / october 2012 e-commerce in India — more than recent estimates of eCommerce investment in Russia in 2011. In a highly competitive market like this.” Jain from Jabong states.
CEO & Co-founder of 99Labels.” Aggarwal of Yebhi. Ahmedabad. The opportunity for us to acquire a brand is limited in this category as there are really no national level players. Lenskart. Fila. Top 10 non-metro cities generating maximum orders: Hyderabad. says. Fila. Donebynone states. bags and wallets. CEO.com. Valyoo Technologies the owner of Bagskart.” “We have a long-term vision for our brand and would continue to invest in its growth. Boss.com apart from Quadrangle – an offline executive search firm as well as Naukri Gulf.com. closely followed by clothing and accessories. Founder & CEO. we would definitely be interested. but if we ever do. com says. Pune. We haven’t given acquisition or stake sale a thought as of now. Also recently launched cosmetics and sarees. If that was the case.com and Watchkart. We have got initial funding from IDG Ventures and have raised US$4 million to work on additional brands as well as to train customer service representatives. Ernakulam.com. This is followed by apparel for men and women and accessories such as watches.com states. Guwahati and Chandigarh Top 5 brands which sell the most in non-metro cities: Nike. “M&A is a strategic and business decision driven by the need to grow inorganically and to provide a reasonable upside/exit to investors.com. Adidas and Converse Top 5 most sold accessory brands in nonmetro cities: Nike.com. these changes are good as major players with Myntra Top selling footwear brands: Puma and Nike closely followed by Adidas and Fila Top selling accessory brands: Ray Ban. American Tourister. Baggit. Adidas and United Colours of Benetton Top 5 categories which sell the most in nonmetro cities: Footwear is the most popular category and amounts to approximately 45% of the entire sales. Esprit Largest selling category: Footwear. We don’t have any plans to do the same as of now. Jaipur.com — which shut down post one month of acquisition — says. Jeevansathi. a recently launched portal for fashion jewellery under the Smile Group. we would do it for the company and not for a particular brand. American Tourister. but there certainly would be opportunity buys and exits. “Valyoo is backed by IDG Ventures.” he further informs. Fastrack and Baggit 70 SHOES & ACCESSORIES / october 2012 Shutterstock . Puma. There is always consolidation in spaces where there is non linear fast growth and this industry is rapidly growing and changing. “Mergers and acquisitions are on the rise as the space consolidates. “We have received a funding of $3. We do not see a wave of such deals. a US$150 million technology venture capital fund in India that is behind companies like Myntra.” Chaitanya Aggarwal.000 products.5 million from Info Edge in the past. Top 5 footwear brands which sell the most in non-metro cities: Nike.LEAD FEATURE E-Commerce Amrinder Dhaliwal. Jewelkart. Fossil. “We have been incubated by Springstar and have received a comprehensive seed round of funding. Ozone Media and others. 99acres. Info Edge owns and manages some of the best known brands on the internet in India— Naukri.” Peyush Bansal. Total nos of footwear & accessory brands selling online: Over 150 footwear and accessory brands. Ishita Swaroop. Total nos of SKUs: Stock over 25. Founder & CEO. Puma. Shiksha. perfumes. com. are seeing fast uptake.com. which recently acquired Stylishyou. Fcuk. Juvalia & You.
Casio. accessories. Gurgaon. Fila. Ebay India. Lavie Top 5 most selling categories in non-metros: Sports shoes. While the reasons for that may have been different. Technology & supply chain partners: Inhouse Total nos of SKUs: 4.000+ SKUs of shoes Top 10 non-metros generating maximum demand: Bangalore. of footwear and accessory brands: 200+ brands of shoes on our website and around 100+ brands for accessories Top selling footwear and accessory brands: Some of the major brands are Adidas. mobiles & tablets.” It may be mentioned that Ebay has a different business model and operates as a marketplace or an online person-to-person trading platform where sellers list their products to reach out to wider masses.LEAD FEATURE E-Commerce superior technology and processes will be able to provide superior service quality and experience. Head-Category Management. Eventually. the fact remains that any e-commerce business. Nautica. Aiva. Chandigarh. Puma. Khorda. “Globally. Cochin Jabong Total nos. women’s footwear 72 SHOES & ACCESSORIES / october 2012 Shutterstock . Non sustainable business models and reduced margins force companies to merge with larger players who have financial muscle and expertise to make this business profitable and sustainable. Fastrack. Guess. worldwide. Chandigarh. Multiple players engage in deep discounting that gets them initial traction and volumes but at the cost of margins. Abhimanyu Lal. UCB.” “Each acquisition that we make is carefully considered. Aiva. Blanca Top 5 most selling accessory brands: Arrow. the ‘Group Buying bubble’ went bust with the exit of some of the most renowned brands. The portal essentially operates on volume of demand and consequent capability to indulge in discount selling. “If you look at the e-commerce industry. Hyderabad. Lucknow Top 5 most selling categories in non-metros: Women’s apparel. Adidas. FCUK. electronics & home appliances. The industry will see a lot more consolidation in the near future. states. Red Tape. HiDesign. DKNY. Hyderabad. helps us gain geographic expansion or helps us enter or enhance a new business area. Clarks. Kamrup. to recover from the hit. We have to ensure that the benefits in technology. Nike.” he adds.000+ SKUs of accessories and 10. This has happened in a large way in daily deal sites. Aiva and Samsung Top 5 brands which sell most in non-metros: Adidas. personnel and services is justified by the cost of acquisition. sustainability is a major challenge unless companies have a clear business model. Navyfont. Burberry. women wear. Jaipur. Challenges After pumping nearly half a billion dollars in the sector last year. Ghaziabad. Pune. handbags & backpacks Top 5 non metros generating maximum orders: Shillong. men’s footwear. Blanca. Yebhi Top selling footwear and accessory brands: Puma. Ebay only looks at acquisitions that help us enhance our technological expertise. is prone to a peculiar set of challenges. Reebok.Dolce & Gabbana. consumer base. companies need to increase their price which drives deal hunters away. men’s apparel.” Lal further states. North Goa. Calvin Klein.
Lucknow. “In India.com. Nike. a lot of people are not comfortable giving out credit card details over the internet. Jaipur. Miss Sixty. Christian Lacroix Brands receiving max traffic: Ed Hardy. however. but companies are scratching around for ways to shed the operational burden. tops. Guwahati. Jain informs. Chandigarh. Another significant advantage that online retail would have over brick and mortar is the ability to reach out to wider masses. Ironically. physical organised retail for products is not taking off too well in smaller 99Labels Total nos of footwear and accessory brands selling online: 500+ brand partners Top selling footwear and accessory brands: Ed Hardy. These range from almost 50-80 per cent of the total orders placed online. Even today. To secure repeat business. Secondly. Satya Paul. Ahmedabad.9 billion through its stores in 2011 compared to $48 billion for Amazon. Guess. EMIs and cash on delivery.com. Online vs Offline The next moot point is whether Indian online retail industry. has also introduced a ‘Card on Delivery’ method to battle out the lack of trust related to security of online payments prevailing among Indian consumers. as a matter of fact is by far the most popular mode of selling online. Out of all these methods. D&G. Michael Kors. with the rise of competition from internet rivals like Amazon. cash on delivery is the least used method. Cash on delivery (CoD). D&G. DKNY. belts Total nos of SKUs: 750 different styles across 8 product categories. Pune. Chhotu Couriers 74 SHOES & ACCESSORIES / october 2012 . growing at an annual rate of 35-40 per cent. Catwalk. D&G. the very things that have propelled e-commerce in India could lead to its downfall. Total manpower: 16 employees including executive level staff Technology & supply chain partners: Working with renowned courier companies such as Blue Dart.LEAD FEATURE E-Commerce “Inventory based e-commerce in India is extremely capital inefficient. Red Tape. might become relevant even in nascent markets such as India. CoD constitutes 80 per cent of the total orders placed. To top it all. Ferre’. Having said that. This trend. Jabong.” he further added. and sales of tablet computers. For Myntra. Valentino. Michael Kors. Bhubaneshwar. Red Tape. it constitutes almost 60 per cent while for Juvalia & You and Donebynone it is 80 per cent and 50 per cent respectively. Catwalk. comprising less than 5 per cent of all our payments. Hyderabad. Puma. Adidas and accessories from Coach. The move was primarily motivated by two emerging trends in the US – sales of TVs. Puma.” For Ebay however. net banking. free shipping. stocking inventory for 60 to 90 days with an annual sales target of US$200m requires working capital of about US$40m-US$50m. Miss Sixty. CEO. Adidas and accessories from Coach. D&G. Certain merchandise categories might face special competition from online retailers specially those who indulge in discount selling in those specific categories. shoes. Valentino.” he says. credit cards. Christian Lacroix Total manpower: 100+ Technology & supply chain partners: Inhouse Shopnineteen Most selling category: Apparel (tops. almost all of it being financed by fickle equity. payment by cash on delivery and. most portals offer incredibly low prices. “We have noticed that a person may not be confident revealing the card details online but is confident swiping the card. This also leads to a considerable rate of return and consequent revenue loss for online retailers. For Yepme. “Cash on Delivery is a special feature created to gain trust of customers. Aramex. Shoes form close to 23% of overall sales figure. Yepme. boss of Matrix partners. Guess. Reebok. Satya Paul. Early March this year. First Flight.” Lal says. where there is absence of store brands. shoppers weren’t flocking to big-box stores like they used to. com states. the scenario is surprisingly different and would bode well for those aiming to stick around in the e-commerce business. Top 10 non-metros generating maximum orders: Bangalore. “Ebay India offers various options such as payments via debit cards. Vivek Gaur. nearly always. digital cameras and videogame consoles had weakened. The first time users generally use CoD but we have seen that repeat buyers generally use credit cards as by then they have already built trust on the brand. dresses. dresses and bottoms) sell the maximum contributing close to 40% of the entire sales. “In India. banks are still reluctant to lend to companies with untested business models. This suggests the trust levels of consumers and their willingness to shop on trusted sources such as Ebay. CoD method has a direct correlation with consumer trust. Dehradun Top 5 most selling categories in non-metros: Jewellery. Nike. smartphones and e-readers had increased. DKNY. physical stores still accounted for more than 95 per cent of retail as Best Buy sold $45. Reebok.” Avnish Bajaj. a VC firm was quoted as saying in a media report. DTDC. can possibly take on brick and mortar retailing which is growing at 15-20 per cent CAGR.com. According to Jain of Jabong. Consumers love it. American consumer electronics retailer Best Buy shut down 50 stores to open 100 small mobile locations across the USA.com.
” he further informs adding “we are India’s first e-commerce site to have video content for each apparel and India’s first site to allow people to make wishlists of multiple products and share them with friends to take opinion on what to buy. To encourage shoppers to buy online. bridging distribution inefficiencies. jewellery Total nos of SKUs: A fast fashion brand bringing new styles every week. In next five years. advanced CRM softwares. So what is each one of them planning to do? “We want to take the technology enablement to the next level of making the products as close to reality as possible. a brick and mortar retailer.8 million fans on Facebook. We are getting orders from more than 580 cities across India. E-commerce is still at a nascent stage in India with over 10 million internet shoppers and over 100 million internet users. Ebay India also has over 1. etc. more subcategories of accessories and workout wear in near future. This would let the shoppers know that their order is “in-process” (someone is walking around in the store and getting the items for them) and when the order is actually ready for pickup. if customers register giving their email and telephone number. handbags. Online shopping portals expect the number of orders coming in from these areas to go up further due to rising internet penetration. Globus and Future Group’s Futurebazaar. Online shopping is convenient and is picking up fast even in nonmetros. we would get an “in-process” text message the next day around 7 AM and be notified that our order is ready to be picked up usually before 8 AM. as the scale goes up. This way customers would have the liberty to shop even after the closing hours of the store provided they are assured of the quality of merchandise and services of the retailer. can provide for a ‘Store pick-up’ option of online ordering. For the many Indians located outside the few cities where modern retail has penetrated. we have seen acceleration in sales from tier II and tier III locations. We see these aspiring consumers from smaller cities latching onto online shopping like never before. online shopping provides access to brands and products which are not available in their city or town.311 cities covering all 28 States and 7 Union Territories in India. retailers which are purely selling online. something that international store retailers such as Lowe and Home Depot and Walmart have been implementing as well. online retailers still have a lot of pulling up of socks to do.com have ventured into online shopping. Leading department store chains such as Shoppers Stop. yet.2 billion.” Donebynone Top 5 categories selling most in non-metro towns: Topwear. Lifestyle. That said.LEAD FEATURE E-Commerce towns due to high retail cost. peacefully coexist. The e-commerce ecosystem is still evolving here. but there is a substantial difference between the attention that is paid to a department store’s online shopping platform and. They have the spending power.” says Pahwa of Shopnineteen. there will be deployment of advanced ERPs. hence e-commerce is the perfect route to deliver products. Logistics companies are also focusing on e-commerce and increasing geographic coverage to cater to e-commerce merchant demand. Non-metro consumers increasingly aspire to consume brands and lifestyle products.com. This is of a population of over 1.” “Ebay India has over 3 million registered users from 3. Total manpower: 35 employees Technology & supply chain partners: Inhouse Juvalia & You Total nos of SKUs: Total number of SKUs online is about 300 Total manpower: 100 + employees Technology & supply chain partners: Microsoft Navision and a host of international freight operators for incoming SCM 76 SHOES & ACCESSORIES / october 2012 .” Ebay’s Lal states. Back to the future While internet and brick and mortar retailing are here to stay and as a matter of fact. footwear. the retailer would send an in-progress status update. Thus. Under this. “We plan to add shades and frames. Have more than 300 styles across categories for the customer to choose from. but no access to products in their city. if we place an order at 11 PM (when the store is closed). growing purchasing power and adoption of latest mobile devices. a tip-off might come handy.” he further elaborates. “Over the past few years. product lifecycle management softwares.
com. Lenskart.com. We are targeting the third quarter to launch our inhouse label and already in talks with manufacturers to source materials. either smartphones or tablets. the future centres around electronic gadgets. specially smartphones. we take our order back. 100 days return policy.” Ashutosh Lawania of Myntra.” Lal concludes. We have received positive response from our shoppers and are planning to expand our services to other cities as well.” he adds. large and loyal user base and are a strong global technology platform and are bullish about further strengthening our leadership position in the market. Telugu. Work with logistics partners and courier companies for deliveries.” Bansal of Valyoo technologies says.” For Ebay.” he adds. “We have been at the forefront of pioneering e-commerce in India and continue to scale our business at a very rapid growth rate. Swaroop of 99Labels. watches Total manpower: 100 Total nos of SKUs: 10.” says Abhimanyu Lal of Ebay. to cater to a wide range of customers pan India.com) Most selling categories: Eyewear.” “We plan to continue focusing on evangelising e-commerce to Indian consumers and continue expanding the market. “We are in the planning stages of launching our private label primarily to fill existing gaps in the market. Shutterstock Valyoo Technologies (Bagskart. which is an area of great focus for eBay. especially in tier 2 and tier 3 cities. We have established strong brand equity.com informs.com states. Aggarwal of Yebhi. will have their first and pre-dominant experience of internet on mobile devices.com by bringing in diverse brands.” Yepme. Tools like virtual wardrobe and virtual dressing room will be added to the existing features. “We have introduced many an initiative all focused at ensuring world class shopping experience for our consumers. feel and functionality of our site. ‘Try and Buy’ policy. Jewelkart. It is very likely that a majority of the next 100 million internet users in India. We at Yepme.com like one-click automatic returns.LEAD FEATURE E-Commerce “We are planning to revamp our offerings in the near future and we are constantly revamping backend technology. we are constantly upgrading ours as we understand the industry is changing and all efforts are going into improving the online shopping experience. Pioneering mobile commerce.com’s Gaur describes.com experience. in-house courier and logistics. “Our aim is to increase product offerings on 99labels. focus on enhancing user experience. “One of the hurdles that most online shopping portals face today in reaching out to non-metro consumers is the language barrier.com helping with the last mile logistics.” “The automations. more variety and may even increase our categories. Under this project. “We will be further introducing a host of features to enhance the online shopping experience. Ebay has been at the forefront of commerce on mobiles. Lest. We have introduced Yebhi Champs – B School graduates who are the face of Yebhi.000 + SKUs Technology & supply chain partners: Inhouse warehousing. 78 SHOES & ACCESSORIES / october 2012 Shutterstock . Malayalam and Kannada.” “We are running a pilot project ‘Try Karo Phir Buy karo’ where we provide risk free shopping to our users. We want to also work towards improving the look. Watchkart. we collect money seven days after delivery and only on the assurance that customers like our product. EMI etc are all to ensure that consumers are 100 percent satisfied and recommend the Yebhi.com says. As far as technology goes. “Globally. com have gone a step ahead by introducing our portal in Hindi followed by launch of other regional languages viz: Tamil. better sales.com. technology and policies of Yebhi. our colossal state-of-art fulfillment centre. benefits and usability.
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