e-commerce
E-commerce (electronic commerce) refers to commercial activities including the electronic buying or selling products and services which are conducted on online platforms or over the Internet. E-commerce draws on technologies such as mobile co ...
in
India
India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
was $147.3 billion in 2024, with 18.7% CAGR through to 2028 which will be further fueled by the technology innovations ( 5G & 6G based higher internet speed, AI and ML based hyper-personalized shopping experience, immersive AR and VR virtual try-ons and virtual stores,
blockchain
The blockchain is a distributed ledger with growing lists of Record (computer science), records (''blocks'') that are securely linked together via Cryptographic hash function, cryptographic hashes. Each block contains a cryptographic hash of th ...
based enhanced supply chain transparency and increased trust among consumers), cheaper data rates, rising smartphone adoption, increased market penetration (Tier II and Tier III cities which contribute 60% of business and
Direct-to-consumer
Direct-to-consumer (DTC or D2C) or business-to-consumer (B2C) is the business model of selling products directly to customers and thereby bypassing any third-party retailers, wholesalers, or middlemen. Direct-to-consumer sales are usually transa ...
India
India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
had an Internet user base of about 690.0 million in 2023, about 40% of the population. Despite being the second-largest user base in world, only behind China (1.079 billion, 48% of population), the penetration of
e-commerce
E-commerce (electronic commerce) refers to commercial activities including the electronic buying or selling products and services which are conducted on online platforms or over the Internet. E-commerce draws on technologies such as mobile co ...
is low compared to markets like the
United States
The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
(266 million, 84%), or
France
France, officially the French Republic, is a country located primarily in Western Europe. Overseas France, Its overseas regions and territories include French Guiana in South America, Saint Pierre and Miquelon in the Atlantic Ocean#North Atlan ...
(54M, 81%), but is growing, adding around 6 million new entrants every month. The industry consensus is that growth is at an inflection point.
In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities. Demand for international consumer products (including long-tail items) is growing faster than in-country supply from authorised distributors and e-commerce offerings. Long tail business strategy allows companies to realize significant profits by selling low volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items. The term was first coined in 2004 by Chris Anderson.
In 2023, the largest e-commerce companies in India were
Flipkart
Flipkart Inc. is an Indian e-commerce company, headquartered in Bangalore, and incorporated in Singapore as a private limited company. The company initially focused on online book sales before expanding into other product categories such as con ...
,
Snapdeal
Snapdeal is an Indian e-commerce company, based in New Delhi, India. It was founded in February 2010 by Kunal Bahl and Rohit Bansal.
Snapdeal is one of the top 5 online marketplaces in India. Snapdeal targets the value e-commerce segment, w ...
and
Amazon
Amazon most often refers to:
* Amazon River, in South America
* Amazon rainforest, a rainforest covering most of the Amazon basin
* Amazon (company), an American multinational technology company
* Amazons, a tribe of female warriors in Greek myth ...
.
In 2018, Amazon beat Flipkart and was recorded the biggest ecommerce in India in terms of revenue. In 2020, Flipkart heavily outsold Amazon by almost two to one by sales during festive retail season.
In 2022, the pilot phase of the Open Network for Digital Commerce was launched.
Market size and growth
India's e-commerce market was worth about $3.9 billion in 2009. As per "India Goes Digital", a report by Avendus Capital, the Indian e-commerce market is estimated at ₹28,500
crore
Crore (; abbreviated cr) denotes the quantity ten million (107) and is equal to 100 lakh in the Indian numbering system. In many international contexts, the decimal quantity is formatted as 10,000,000, but when used in the context of the India ...
($6.3 billion) for the year 2011. Online travel constitutes a sizable portion (87%) of this market today. Online travel market in India had a growth rate of 22% over the next 4 years and reach ₹54,800 crore ($12.2 billion) in size by 2015. Indian e-tailing industry is estimated at ₹3,600 crore (US$800 million) in 2011 and estimated to grow to ₹53,000 crore ($11.8 billion) in 2015. The market went up to $12.6 billion in 2013. In 2013, the e-retail segment was worth US$2.3 billion. About 79% of India's e-commerce market was travel related in 2013. According to
Google
Google LLC (, ) is an American multinational corporation and technology company focusing on online advertising, search engine technology, cloud computing, computer software, quantum computing, e-commerce, consumer electronics, and artificial ...
India, there were 35 million online shoppers in India in 2014 Q1 and was expected to cross 100 million mark by end of year 2016.
CAGR vis-à-vis a global growth rate of 8–10%. Electronics and Apparel are the biggest categories in terms of sales. Overall e-commerce market had reached ₹1,07,800 crores (US$24 billion) by the year 2015 with both online travel and e-tailing contributing equally. Another big segment in e-commerce is mobile/DTH recharge with nearly 1 million transactions daily by operator websites. Year 2016 also saw online sales of luxury products like jewellery also increased. Most of the retail brands have also started entering into the market and they expect at least 20% sales through online in next 2–3 years. According to Google India Research in 2016, by 2021 India is expected to generate $100 billion online retail revenue out of which $35 billion will be through fashion e-commerce.
The ecommerce industry was reported at $24 billion in 2017 and was recognised as the fastest growing industry in India. The ecommerce market grew to $38.5 billion in 2018. It is estimated that one in every three Indian shops via smartphone and online retailers deliver to 20,000 pin-codes out of the 100,000 pin-codes in India. As per
Goldman Sachs
The Goldman Sachs Group, Inc. ( ) is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many internationa ...
, India's e-commerce industry will reach $99 billion in size while online retail is expected to more than double to around 11% by 2024 from 4.7% in 2019 while increasing at 27% compound annual growth rate (CAGR). The online grocery segment that is below $2 billion will reach $29 billion in size by 2024. Online grocery orders will grow from 3,00,000 per day in 2019 to more than 5 million per day by 2024. Non grocery eCommerce penetration will be 16.1 percent by 2021.
As per property consultant Colliers International, the demand for warehousing of 5,000 to 10,000 square feet size will increase due to
COVID-19
Coronavirus disease 2019 (COVID-19) is a contagious disease caused by the coronavirus SARS-CoV-2. In January 2020, the disease spread worldwide, resulting in the COVID-19 pandemic.
The symptoms of COVID‑19 can vary but often include fever ...
lock-downs which lead to a surge in online orders of essential items for same day delivery especially in tier-1 cities like
Mumbai
Mumbai ( ; ), also known as Bombay ( ; its official name until 1995), is the capital city of the Indian state of Maharashtra. Mumbai is the financial capital and the most populous city proper of India with an estimated population of 12 ...
,
Kolkata
Kolkata, also known as Calcutta ( its official name until 2001), is the capital and largest city of the Indian state of West Bengal. It lies on the eastern bank of the Hooghly River, west of the border with Bangladesh. It is the primary ...
,
Bengaluru
Bengaluru, also known as Bangalore (List of renamed places in India#Karnataka, its official name until 1 November 2014), is the Capital city, capital and largest city of the southern States and union territories of India, Indian state of Kar ...
,
Chennai
Chennai, also known as Madras (List of renamed places in India#Tamil Nadu, its official name until 1996), is the capital city, capital and List of cities in Tamil Nadu by population, largest city of Tamil Nadu, the southernmost states and ...
and
New Delhi
New Delhi (; ) is the Capital city, capital of India and a part of the Delhi, National Capital Territory of Delhi (NCT). New Delhi is the seat of all three branches of the Government of India, hosting the Rashtrapati Bhavan, New Parliament ...
. Flipkart will debut a hyperlocal service called Flipkart Quick in Bengaluru to start 90 minutes deliveries.
Amazon
Amazon most often refers to:
* Amazon River, in South America
* Amazon rainforest, a rainforest covering most of the Amazon basin
* Amazon (company), an American multinational technology company
* Amazons, a tribe of female warriors in Greek myth ...
observed spike in page views with four times increase in "Add to Cart" during the lockdown, leading to doubling of sales. It also started selling auto insurance in partnership with Acko General Insurance which is available to users through Amazon app and mobile website. With opening of 10 new warehouse, the count of Amazon warehouse in India stands at 60 across 15 states that has an area equivalent to more than 100 football fields.
Report from
software as a service
Software as a service (SaaS ) is a cloud computing service model where the provider offers use of application software to a client and manages all needed physical and software resources. SaaS is usually accessed via a web application. Unlike o ...
(SaaS) provider Unicommerce shows increasing penetration of e-commerce beyond tier-1 cities with major growth coming from tier-2 and tier-3 towns/villages due to increasing
vernacular language
Vernacular is the ordinary, informal, spoken form of language, particularly when perceived as having lower social status or less prestige than standard language, which is more codified, institutionally promoted, literary, or formal. More n ...
content and improving last mile delivery. Consumers are also diversifying their purchasing option from large scale e-commerce channels like Amazon or Flipkart to specific retail brand websites. As per Goldman Sachs, three or four players can co-exist in the e-commerce space given the size of India but travel, food delivery, ride-hailing services will see a maximum of two players capturing the market. Reliance Jio will increase competition in grocery, fintech, online retail, food delivery. From February 2020 to June 2020 during the COVID-19 lock-down period, e-commerce increased by 117% with the delivery of only essential supplies that is now bigger than the pre-COVID-19 level. Flipkart surpassed 1.5 billion visits per month with 45% growth in monthly active user while 30% growth in transaction per consumer. Tier-3 markets are showing 53% year on year growth with higher internet penetration and connectivity. Kinetic Green started selling electric
auto rickshaw
An auto rickshaw is a motorized version of the pulled rickshaw or cycle rickshaw. Most have three wheels and do not tilt. They are known by many other terms in various countries, including three-wheeler, Adaidaita Sahu, Keke-napep, Maruwa, auto, ...
and golf carts online mainly in eastern and northern parts of India with a revenue of ₹75 crore in 2019 which now stands at ₹100 crore as of August 2020. E-commerce helped
Nestlé
Nestlé S.A. ( ) is a Swiss multinational food and drink processing conglomerate corporation headquartered in Vevey, Switzerland. It has been the largest publicly held food company in the world, measured by revenue and other metrics, since 20 ...
increase sales at a rate of 122% which contributes to 3.6% of overall sales during Q2 of 2020–21.
Apple Inc.
Apple Inc. is an American multinational corporation and technology company headquartered in Cupertino, California, in Silicon Valley. It is best known for its consumer electronics, software, and services. Founded in 1976 as Apple Comput ...
is opening online channel to sell products in India for the first time during August 2020 to target the festival seasons.
Closures
Though the sector has witnessed tremendous growth and is expected to grow, many e-commerce ventures have faced tremendous pressure to ensure cash flows. But it has not worked out for all the e-commerce websites. Many of them like Dhingana, IndiaPlaza.in, eBay-India, Rock.in, Seventy MM amongst others had to close down or change their business models to survive.
In March 2020, the
Government of India
The Government of India (ISO 15919, ISO: Bhārata Sarakāra, legally the Union Government or Union of India or the Central Government) is the national authority of the Republic of India, located in South Asia, consisting of States and union t ...
restricted online sales of all goods except for critical items including
food
Food is any substance consumed by an organism for Nutrient, nutritional support. Food is usually of plant, animal, or Fungus, fungal origin and contains essential nutrients such as carbohydrates, fats, protein (nutrient), proteins, vitamins, ...
,
pharmaceuticals
Medication (also called medicament, medicine, pharmaceutical drug, medicinal product, medicinal drug or simply drug) is a drug used to diagnose, cure, treat, or prevent disease. Drug therapy ( pharmacotherapy) is an important part of the ...
, and
medical equipment
A medical device is any device intended to be used for medical purposes. Significant potential for hazards are inherent when using a device for medical purposes and thus medical devices must be proved safe and effective with reasonable assura ...
. Many Indian startups including Urban Company, BookMyShow, Pepperfry and Nykaa, which did not feature in the government's list of notified essential services, were running at a loss due to
COVID-19
Coronavirus disease 2019 (COVID-19) is a contagious disease caused by the coronavirus SARS-CoV-2. In January 2020, the disease spread worldwide, resulting in the COVID-19 pandemic.
The symptoms of COVID‑19 can vary but often include fever ...
pandemic.
Infrastructure
There are many hosting companies working in India, some of which offer
SaaS
Software as a service (SaaS ) is a cloud computing service model where the provider offers use of application software to a client and manages all needed physical and software resources. SaaS is usually accessed via a web application. Unlike oth ...
for hosting web stores. India has got its own version of Cyber Monday known as Great Online Shopping Festival which started in December 2012, when Google India partnered with e-commerce companies including
Flipkart
Flipkart Inc. is an Indian e-commerce company, headquartered in Bangalore, and incorporated in Singapore as a private limited company. The company initially focused on online book sales before expanding into other product categories such as con ...
Snapdeal
Snapdeal is an Indian e-commerce company, based in New Delhi, India. It was founded in February 2010 by Kunal Bahl and Rohit Bansal.
Snapdeal is one of the top 5 online marketplaces in India. Snapdeal targets the value e-commerce segment, w ...
Thanksgiving Day
Thanksgiving is a national holiday celebrated on various dates in October and November in the United States, Canada, Saint Lucia, Liberia, and unofficially in countries like Brazil and Germany. It is also observed in the Australian territory ...
.
In early June 2013,
Amazon.com
Amazon.com, Inc., doing business as Amazon, is an American multinational technology company engaged in e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. Founded in 1994 by Jeff Bezos in Bellevu ...
launched their Amazon India marketplace without any marketing campaigns. In July 2014, Amazon had said it will invest $2 billion (Rs 12,000 crore) in India to expand the business, after its largest Indian rival, Flipkart announced $1 billion in funding. In June 2016, Amazon agreed to invest another $3 billion to further pressure rivals Flipkart &
Snapdeal
Snapdeal is an Indian e-commerce company, based in New Delhi, India. It was founded in February 2010 by Kunal Bahl and Rohit Bansal.
Snapdeal is one of the top 5 online marketplaces in India. Snapdeal targets the value e-commerce segment, w ...
Amazon has also entered grocery segment with its Kirana now in Bangalore and is also planning to enter in various other cities like
Delhi
Delhi, officially the National Capital Territory (NCT) of Delhi, is a city and a union territory of India containing New Delhi, the capital of India. Straddling the Yamuna river, but spread chiefly to the west, or beyond its Bank (geography ...
,
Mumbai
Mumbai ( ; ), also known as Bombay ( ; its official name until 1995), is the capital city of the Indian state of Maharashtra. Mumbai is the financial capital and the most populous city proper of India with an estimated population of 12 ...
and
Chennai
Chennai, also known as Madras (List of renamed places in India#Tamil Nadu, its official name until 1996), is the capital city, capital and List of cities in Tamil Nadu by population, largest city of Tamil Nadu, the southernmost states and ...
and faces stiff competition with Indian startups. A large proportion of traffic towards e-commerce sites is driven by coupon sites.
Funding
Examples of venture capital firms having invested in e-commerce companies in India are as follows:
Flipkart.com raised about US$2.3 billion. On 10 July 2013, Flipkart announced it had received $200 million from existing investors
Tiger Global
Tiger Global Management, LLC (often referred to as Tiger Global and formerly known as Tiger Technology) is an American investment firm founded by Chase Coleman III, a former Tiger Management employee under Julian Robertson, in March 2001. It ma ...
,
Naspers
Naspers Limited (until 1998 Die Nasionale Pers) is a South African multinational internet, technology and multimedia holding company headquartered in Cape Town.
The company has interests in online retail, publishing, real estate, and ventu ...
,
Accel Partners
Accel, formerly known as Accel Partners, is a global venture capital firm. Accel works with startups in seed, early and growth-stage investments. The company has offices in Palo Alto, California and San Francisco, California, with additional ope ...
Morgan Stanley Wealth Management
Morgan Stanley Wealth Management is an American Multinational corporation, multinational financial services corporation specializing in Broker, retail brokerage. It is the wealth & asset management division of Morgan Stanley.
On January 13, 2009, ...
, Sofina, Vulcan Inc. and more from Tiger Global.
In February 2014, online fashion retailer Myntra.com raised $50 million from a group of investors led by Premji Invest, the investment company floated by Azim Premji, Chairman of
Wipro
Wipro Limited () is an Indian multinational technology company based in Bengaluru. It provides information technology, consulting and business process services. It is one of India's Big Six IT services companies. Wipro's services include cloud ...
. May 2014 also witnessed an acquisition of
Myntra
Myntra is an Indian fashion e-commerce company headquartered in Bengaluru, Karnataka, India. The company was founded in 2007-2008 to sell personalized gift items. In May 2014, Myntra.com was acquired by Flipkart.
In May 2022, Myntra launched ...
by
Flipkart
Flipkart Inc. is an Indian e-commerce company, headquartered in Bangalore, and incorporated in Singapore as a private limited company. The company initially focused on online book sales before expanding into other product categories such as con ...
reportedly for ₹2,000 crores.
In September 2015, PepperTap raised $36 million from
Snapdeal
Snapdeal is an Indian e-commerce company, based in New Delhi, India. It was founded in February 2010 by Kunal Bahl and Rohit Bansal.
Snapdeal is one of the top 5 online marketplaces in India. Snapdeal targets the value e-commerce segment, w ...
and others.
In July 2020, Purplle raised $30 million from
Goldman Sachs
The Goldman Sachs Group, Inc. ( ) is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many internationa ...
and others.
In January 2021, B2B Udaan has raised $280 million from new investors Moonstone Capital Partners and Octahedron Capital, besides existing investors Lightspeed Venture Partners,
DST Global
DST Global is a venture capital and private equity firm that primarily invests in late-stage internet companies. DST Global has been described as one of the largest and most influential venture firms in the world, with an estimated $50 bill ...
The spread of e-commerce has led to the rise of several niche players who largely specialize their products around a specific theme. As many as 1,06,086 websites were registered daily and more than 25% are for niche businesses.
During 2014,
Royal Enfield
Royal Enfield is an Indian motorcycle manufacturer, headquartered and manufactured in Chennai, India. Royal Enfield (England), Royal Enfield is the oldest motorcycle manufacturer in continuous production.Arvind are now creating clothing lines just for the e-commerce markets. Some of the bigger online retailer like VoxPop Clothing have secured multiple rounds of funding, the last round raising $1 million from Blume Ventures in 2014.
As these niche businesses get popular, they are slowly getting acquired by the big players. BabyOye was acquired by Mahindra Retail, part of the $17 billion
Mahindra Group
Mahindra Group is an Indian multinational conglomerate, headquartered in Mumbai. The group has operations in over 100 countries, with a presence in aerospace, agribusiness, aftermarket automotive components, construction equipment, defen ...
. Ekstop was acquired by the Godrej Group to complement their offline chain of Nature's Basket stores.Similarly, Techjockey has emerged as a specialized B2B marketplace for software solutions, offering enterprises access to a curated range of IT products and services
Mergers and acquisitions
According to a report by Grant Thronton, as much as US$2.1 billion worth of mergers and acquisitions were inked in 2017 in the booming Indian e-commerce industry. Here is the list of Mergers & Acquisitions which happened in India over a period of time:
Regulation
Foreign e-commerce is subject to regulations in India; under local law, foreign companies are to serve solely as marketplaces between vendors and their customers, and are forbidden from holding inventory in the country. Under new regulations effective 1 February 2019, foreign companies will be forbidden from selling any products from vendors that they control or have equity stakes in, and it is forbidden to enter into exclusivity deals between vendors and websites. This regulation is seen as a counter to Amazon and Walmart's influence on the market, which have given smaller traders a disadvantage in the market.
See also
*
Disintermediation
Disintermediation is the removal of intermediary, intermediaries in economics from a supply chain, or "cutting out the middlemen" in connection with a transaction or a series of transactions. Instead of going through traditional distribution cha ...