Industry analysis: E-Commerce

9.33% CAGR Overview 27% CAGR (19-24)

$6.39 • APAC, North America (NA) led brick-and-mortar & ecommerce sales, followed by Western Europe (WE)
$4.89 $30 $99
Global Tn • Due in part to China's dominance, APAC gained significant lead (62.6% share) [NA (19.1%), WE (12.7%)] Indian
Tn Bn Bn
Market* • Indian e-commerce market expected to grow at 27% CAGR (2019-24), projected to reach $99 Bn Market**
by 2024, $200 Bn by 2026, Grocery & fashion/apparel would be the key drivers
2021 2024 • Indian e-commerce orders’ volume rose by 36% in Q4’20, Personal care, beauty, wellness - Beneficiary
2020 2024

Classification Business Model Cost Drivers

By Participants Drop shipping – Not required to Private labeling –
By Business Segments^ IT Infrastructure and
maintain inventory to sell. It Outsource manufacturing
purchases the product from a 3rd and sell products under Platform support cost
Business to Business B2B party and had it shipped directly their brand name Logistics & Distribution
40% to the customer White labeling – Purchase cost
Business to Consumer B2C generic products made for Inventory Management
Warehousing – Purchase products
from manufacturers/ wholesalers, various companies and sell costs
Consumer to Consumer C2C
40% 6% maintains inventory in their under their brand name Marketing & Promotion
Consumer to Business C2B warehouse and facilitate delivery Subscription Service – expenses
7% D2C – Selling products to Deliver products against
Government to Consumer G2C 7% consumers directly, without any periodic subscription by
Payment processing
expenses
3rd party middlemen involvement users
Government to Business G2B
Consumer Electronics Food & Grocery
Key Players
Apparel Jewellery Furniture & Others
B2C
Value Chain E-Commerce
Platform
Distribution & Logistics
Market 31.9% 31.2% 4.7% 3.3% 1.9%
Share$
Manufacturer/ Suppliers/ E-Commerce
Customer
Wholesaler/ Retailer Platform B2B
E-Commerce
Platform
Value Added Services, Customer Service

Source: McKinsey, Invest India, IBEF, Statista *eMarketer **EY-IVCA Trend book 2021, IBEF
^IBEF, Statista $Oct’20 - Forrester Research
 Industry analysis: E-Commerce
Key E-commerce platforms across segments Growth Drivers
Travel, Mobility Ola, Uber, MakeMyTrip, Yatra, Cleartrip, Goibibo
o Rise in consumers in middle income o Growth of logistics, warehousing facilities
Logistics BlackBuck, Delhivery, Rivigo, Shadowfax o Increase in video consumption, social media o Shifting consumer preference, especially after
usage driven by cheaper mobile data Covid-19 induced lockdown
Social Commerce Meesho, DealShare, Mall91, BulBul o Reducing urban-rural divide o Rise in digital and technological acceptance
o 3/5 orders from tier-2 and smaller towns, o Consumers started experiencing benefits -
Gaming Dream11, Mobile Premium League, Octro target of ~200 Mn online shoppers by 2025 convenience, discounts, time saving
o Digital payment infrastructure development o Favorable startup ecosystem spurring innovation
Key Business Gross Merchandise Average Revenue No. of Conversion rate, o Government support & initiatives o Local and foreign investment inflows
Metrics Value (GMV) per User (ARPU) users Retention rate

Regulatory Environment Risks and Challenges

100% FDI allowed in B2B e-commerce, 100% FDI under Government e-Market Place Online security breach & cybersecurity issues
FDI (GeM)
automatic route in marketplace model of e-commerce
Competition from digital giants venturing into the space and
National Retail Policy brick and mortar retailers
In Union Budget 2020-21 - allocated $1.24 Bn to Government Digital payment & 5G
Budget BharatNet Project - providing broadband services to Schemes & support Data Privacy concerns – customer trust issues
150,000-gram panchayats Initiatives
Consumer Protection Rules, High dependence on platform & underlying technology
E-commerce Rules 2020 - effective competition and 2020
e-Commerce
efficiency in e-commerce market by highlighting R&R of Digital India, Start-up India, Country specific concerns around the future dominance of
rules
marketplace and sellers Skill India, Innovation Fund some major players

Emerging Trends
Omnichannel Presence – Offline channels Indian e-commerce $10 Bn investments in last Rise in corporate India’s ambition to Technological innovations – analytics
embracing online medium; online platforms decade ~60-70% of total PE/VC investments. 11 out build “Superapp”. Superapps ~4-7x ARPU driven customer engagement,
opening experience stores of 52 unicorns in India are e-commerce companies than single purpose e-commerce personalized digital advertising

D2C – With increasing brand reach and rising Increasing penetration and acceptance of Increase in growth of Hyperlocal delivery RPA, AI, IoT, Cybersecurity will be the
traction in niche product categories. D2C is M-commerce and Social commerce. Social market, last-mile delivery. Online key focus area for the industry
$100 Bn+ market opportunity by 2025. India commerce GMV ~$ 2 Bn in 2020, to reach $20 Bn by grocery, e-pharmacy, social commerce incumbents, amid increasing competition
houses > 800 D2C brands 2025, and to $70 Bn by 2030 expected to boom in 2021 in the space

Source: McKinsey, Invest India, IBEF, Statista, EMIS, Economic Times, Inc42 #
As of FY21 (Source: Statista) * CEA estimates