INTERNET RETAILING IN INDIA

Euromonitor International
January 2018
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LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
Prospects ..................................................................................................................................... 1
Omnichannel Will Remain the Strongest Strategy Employed by Online Retailers .................... 1
Internet Retailing Will Be Driven by Convenience and Not Price in the Forecast Period .......... 1
Growth Will Continue, Although Will Plateau ............................................................................ 1
Competitive Landscape ................................................................................................................ 2
Flipkart Online Services Continues To Lead Internet Retailing ................................................. 2
the Growth of Online Specialists Drives the Competition in 2017 ............................................. 2
the Competition Between Inventory-led and Marketplace Models Becomes Intense ............... 2
Channel Data ............................................................................................................................... 2
Table 1 Internet Retailing by Category: Value 2012-2017 ......................................... 2
Table 2 Internet Retailing by Category: % Value Growth 2012-2017 ........................ 3
Table 3 Internet Retailing GBO Company Shares: % Value 2013-2017 ................... 3
Table 4 Internet Retailing GBN Brand Shares: % Value 2014-2017 ......................... 4
Table 5 Internet Retailing Forecasts by Category: Value 2017-2022 ........................ 5
Table 6 Internet Retailing Forecasts by Category: % Value Growth 2017-2022 ....... 5

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INTERNET RETAILING IN INDIA

HEADLINES
 Internet retailing in India increases by 35% in current value terms in 2017, to reach
INR1,959.7 billion
 Flipkart Online Services leads internet retailing in GBO terms in 2017, with a 34% value share
 Internet retailing will be driven by convenience over price during the forecast period

PROSPECTS

Omnichannel Will Remain the Strongest Strategy Employed by Online

Retailers
Omnichannel retailing will continue to be the most successful strategy used by online
retailers. The importance of having a physical store was evident from the success of online
retailers which set up offline stores from 2015. Their bricks-and-mortar stores helped even the
most sceptical consumers to develop a certain level of trust in the channel, as they could touch
and feel products before placing an order. This was exemplified by Pepperfry.com, Nykaa.com,
Zivame.com and Babyoye.com, amongst many others. In the forecast period, however, bricks-
and-mortar stores will be more useful for companies in terms of inventory and stock
management for the online arm, combined with pick-up locations or exchange and return points
for consumers.

Internet Retailing Will Be Driven by Convenience and Not Price in the

Forecast Period
In March 2016, for the first time in the history of internet retailing in India, the Enforcement
Directorate defined the marketplace model. Along with it came restrictions in terms of the
discounts offered by online retailers. As a result, 2017 witnessed a plateauing of the growth of
the channel. This was also, however, because the channel was reaching its peak in the product
life cycle. It was no longer chosen by consumers just for its better prices, but rather for the
convenience it offered. Consumers can shop from home, pay with multiple payment options, or
with Amazon Prime Now, and receive delivery the next day; therefore, consumers started to use
online retailing because they genuinely preferred it over offline retailing. This will drive the
growth of internet retailing over the forecast period. Millennial shoppers are more conscious of
time spent than money spent, due to their high disposable incomes, and since internet retailing
provides the best solution for saving time, growth will continue to be driven by convenience.

Growth Will Continue, Although Will Plateau

Internet retailing will no longer be a channel which will continue to have exponential growth. It
has finally been accepted and has become a preferred channel in retailing in India; to the extent
where the majority of organised retailers have an online presence, either of their own, or via
multi-brand online retailers such as Flipkart or Amazon. As a result of the greater maturity of the
channel, growth is expected to plateau. The forecast period will mark the complete
establishment of internet retailing as a trusted channel for consumers for any of retail
requirement.

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COMPETITIVE LANDSCAPE

Flipkart Online Services Continues To Lead Internet Retailing

Flipkart Online Services maintained its leading position in internet retailing in 2017. The
retailer continued to ride on its first-mover advantage, which helped it to have immense brand
recall amongst consumers. Furthermore, it is known for its impeccable delivery system, which
allows it to deliver products in the shortest possible time, avoiding hassle for consumers. This,
combined with its strong brand value amongst consumers, as it is the poster boy for online
retailing in India, helped the retailer to maintain its lead.

the Growth of Online Specialists Drives the Competition in 2017

The competition within internet retailing was no longer just about gross merchandising
revenues in 2017. Online specialist retailers became a force to be reckoned with for multi-brand
retailers. Online furniture specialists such as Urbanladder.com and Pepperfry.com, or online
beauty specialists such as Nykaa.com and Purplle.com, started to give strong competition to
multi-brand retailers such as Flipkart and Amazon. Although in terms of revenue generation,
multi-brand online retailers were leaps ahead of specialists, the latter slowly and steadily carved
a niche for themselves, whereby consumers who were well-educated and learned about these
products preferred to use a specialist online retailer over a multi-brand retailer.

the Competition Between Inventory-led and Marketplace Models

Becomes Intense
The inventory-led model continued to be successful for smaller retailers, which were able to
manage the number of orders. This was also applicable for grocery online shopping. However,
as revenue generation started to grow, most retailers switched to the marketplace model, or
used a half-and-half model. The marketplace model allows retailers to offer a larger variety of
products, brands and price points, resulting in them winning the competition against the
inventory model, led by retailers which are more niche in their product categories.

CHANNEL DATA
Table 1 Internet Retailing by Category: Value 2012-2017

INR bn
2012 2013 2014 2015 2016 2017

Apparel and Footwear 17.9 39.4 103.6 163.7 294.1 346.4

Internet Retailing
Beauty and Personal 2.3 3.8 5.1 6.5 8.6 8.9
Care Internet Retailing
Consumer Appliances 4.2 5.1 5.7 6.6 7.7 8.9
Internet Retailing
Consumer Electronics 46.1 76.4 128.5 197.3 247.2 298.9
Internet Retailing
Consumer Health 1.3 1.5 1.9 2.3 2.8 3.0
Internet Retailing
Food and Drink Internet - - 4.2 6.3 9.0 12.2
Retailing
Home Care Internet - 0.1 0.2 0.3 0.3 0.4
Retailing

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Home Improvement and - - - - 0.0 0.0

Gardening Internet
Retailing
Homewares and Home - 0.3 2.1 12.1 21.3 30.3
Furnishings Internet
Retailing
Media Products Internet 12.8 16.4 20.6 24.3 27.5 31.1
Retailing
Personal Accessories 17.4 22.5 34.5 46.7 61.5 75.3
and Eyewear Internet
Retailing
Pet Care Internet 0.0 0.0 0.1 0.1 0.1 0.2
Retailing
Traditional Toys and 0.4 0.7 1.1 1.8 2.8 3.5
Games Internet Retailing
Video Games Hardware 0.0 0.0 0.0 0.0 0.0 0.1
Internet Retailing
Other Internet 53.3 60.6 267.4 292.3 766.5 1,140.7
Retailing Internet
Retailing
Internet Retailing 155.8 226.9 575.1 760.3 1,449.5 1,959.8
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

Table 2 Internet Retailing by Category: % Value Growth 2012-2017

% current value growth, retail value rsp excl sales tax

2016/17 2012-17 CAGR 2012/17 Total

Apparel and Footwear Internet Retailing 17.8 80.8 1,832.8

Beauty and Personal Care Internet 3.4 30.6 280.0
Retailing
Consumer Appliances Internet Retailing 15.8 16.1 110.7
Consumer Electronics Internet Retailing 20.9 45.3 548.6
Consumer Health Internet Retailing 8.4 19.0 138.6
Food and Drink Internet Retailing 35.0 - -
Home Care Internet Retailing 22.9 - -
Home Improvement and Gardening 146.9 - -
Internet Retailing
Homewares and Home Furnishings 42.2 - -
Internet Retailing
Media Products Internet Retailing 13.0 19.4 142.8
Personal Accessories and Eyewear 22.4 34.1 333.9
Internet Retailing
Pet Care Internet Retailing 39.7 42.0 478.2
Traditional Toys and Games Internet 23.0 52.3 719.9
Retailing
Video Games Hardware Internet Retailing 32.9 32.3 305.9
Other Internet Retailing Internet 48.8 84.5 2,038.8
Retailing
Internet Retailing 35.2 65.9 1,158.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

Table 3 Internet Retailing GBO Company Shares: % Value 2013-2017

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% retail value rsp excl sales tax

Company 2013 2014 2015 2016 2017

Flipkart Online 20.7 37.5 37.3 29.9 34.3

Services Pvt Ltd
Amazon.com Inc 1.2 9.8 25.5 23.2 26.6
Jasper Infotech Pvt Ltd 11.6 18.3 12.8 4.9 2.6
Dell Inc 12.9 5.6 4.7 2.8 2.1
Rocket Internet GmbH 2.3 2.3 2.0 1.4 1.4
FNS E-Commerce Ventures - 0.0 0.1 0.2 0.4
Pvt Ltd
Manash Lifestyle Pvt Ltd - 0.0 0.1 0.2 0.3
Network18 Group 0.4 0.3 0.3 0.2 0.2
Apple Inc 0.5 0.3 0.3 0.2 0.2
Rediff.com India Ltd 0.4 0.1 0.1 0.1 0.0
Actoserba Pte Ltd 0.2 0.1 0.1 0.0 0.0
eBay Inc 0.1 0.1 0.1 0.0 -
Times of India Group, The 0.6 0.3 0.2 - -
Indiaplaza India Pvt Ltd 0.3 0.1 0.1 - -
Future Group 0.0 0.0 - - -
Myntra.com 5.9 - - - -
Sify Ltd 0.4 - - - -
Digitail Management - - - - -
Services Pvt Ltd
Others 42.6 25.2 16.3 36.9 31.9
Total 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

Table 4 Internet Retailing GBN Brand Shares: % Value 2014-2017

% retail value rsp excl sales tax

Brand Company (GBO) 2014 2015 2016 2017

3rd Party Merchants Amazon.com Inc 9.7 25.4 23.2 26.6

Flipkart Flipkart Online 32.4 32.3 24.4 23.8
Services Pvt Ltd
Myntra Flipkart Online 4.7 4.4 4.6 6.2
Services Pvt Ltd
3rd Party Merchants Flipkart Online 0.4 0.6 0.9 4.3
Services Pvt Ltd
3rd Party Merchants Jasper Infotech Pvt Ltd 18.3 12.8 4.9 2.6
Dell Dell Inc 5.6 4.7 2.8 2.1
Jabong.com Rocket Internet GmbH 2.3 2.0 1.4 1.4
Nykaa.com FNS E-Commerce Ventures 0.0 0.1 0.2 0.4
Pvt Ltd
Purplle.com Manash Lifestyle Pvt Ltd 0.0 0.1 0.2 0.3
HomeShop18 Network18 Group 0.3 0.3 0.2 0.2
App Store Apple Inc 0.3 0.3 0.2 0.2
India Online Rediff.com India Ltd 0.1 0.1 0.1 0.0
Zivame Actoserba Pte Ltd 0.1 0.1 0.0 0.0
3rd Party Merchants eBay Inc 0.1 0.1 0.0 -
Indiatimes Shopping Times of India Group, The 0.3 0.2 - -
Indiaplaza Indiaplaza India Pvt Ltd 0.1 0.1 - -
Junglee.com Amazon.com Inc 0.1 0.1 - -
Futurebazaar Future Group 0.0 - - -
Letsbuy Digitail Management - - - -
Services Pvt Ltd
Myntra Myntra.com - - - -

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Others 25.2 16.3 36.9 31.9

Total 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

Table 5 Internet Retailing Forecasts by Category: Value 2017-2022

INR bn
2017 2018 2019 2020 2021 2022

Apparel and Footwear 346.4 384.9 420.2 449.2 488.1 530.4

Internet Retailing
Beauty and Personal 8.9 9.9 11.0 12.2 13.5 14.9
Care Internet Retailing
Consumer Appliances 8.9 9.9 11.0 12.2 13.4 14.8
Internet Retailing
Consumer Electronics 298.9 317.0 342.5 370.1 400.2 432.9
Internet Retailing
Consumer Health 3.0 3.3 3.7 4.0 4.0 4.2
Internet Retailing
Food and Drink Internet 12.2 15.4 19.0 22.7 26.6 30.8
Retailing
Home Care Internet 0.4 0.5 0.6 0.7 0.8 0.9
Retailing
Home Improvement and 0.0 0.0 0.0 0.0 0.0 0.0
Gardening Internet
Retailing
Homewares and Home 30.3 39.6 50.9 64.4 80.4 100.3
Furnishings Internet
Retailing
Media Products Internet 31.1 38.3 50.8 69.5 97.1 137.0
Retailing
Personal Accessories 75.3 83.0 98.2 116.1 136.3 166.1
and Eyewear Internet
Retailing
Pet Care Internet 0.2 0.2 0.3 0.4 0.4 0.5
Retailing
Traditional Toys and 3.5 4.1 4.8 5.6 6.7 7.9
Games Internet Retailing
Video Games Hardware 0.1 0.1 0.1 0.1 0.2 0.2
Internet Retailing
Other Internet 1,140.7 1,558.4 2,043.5 2,617.7 3,215.1 3,826.3
Retailing Internet
Retailing
Internet Retailing 1,959.8 2,464.6 3,056.4 3,744.9 4,482.7 5,267.1
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
Note: Forecast value data in constant terms.

Table 6 Internet Retailing Forecasts by Category: % Value Growth 2017-2022

% constant value growth, retail value rsp excl sales tax

2017/2018 2017-22 CAGR 2017/22 Total

Apparel and Footwear Internet Retailing 11.1 8.9 53.1

Beauty and Personal Care Internet 11.3 10.9 68.1

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Retailing
Consumer Appliances Internet Retailing 11.4 10.7 66.3
Consumer Electronics Internet Retailing 6.0 7.7 44.8
Consumer Health Internet Retailing 11.4 7.0 40.5
Food and Drink Internet Retailing 26.6 20.4 152.8
Home Care Internet Retailing 20.6 17.2 121.1
Home Improvement and Gardening 40.5 32.1 301.6
Internet Retailing
Homewares and Home Furnishings 30.7 27.1 231.4
Internet Retailing
Media Products Internet Retailing 23.3 34.5 340.7
Personal Accessories and Eyewear 10.1 17.1 120.4
Internet Retailing
Pet Care Internet Retailing 26.6 23.1 183.1
Traditional Toys and Games Internet 17.6 17.6 125.2
Retailing
Video Games Hardware Internet Retailing 23.9 35.2 351.2
Other Internet Retailing Internet 36.6 27.4 235.4
Retailing
Internet Retailing 25.8 21.9 168.8
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
Note: Forecast value data in constant terms.

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