E-commerce in India

India had an internet user base of about 354 million as of June 2015[1] and is expected to cross 500 million in 2016.[2] Despite being the second-largest userbase in world, only behind China (650 million, 48% of population), the penetration of e-commerce is low compared to markets like the United States (266 million, 84%), or France (54 M, 81%), but is growing at an unprecedented rate, adding around 6 million new entrants every month.[3] The industry consensus is that growth is at an inflection point.[4]

In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities.[5] Demand for international consumer products (including long-tail items) is growing much faster than in-country supply from authorised distributors and e-commerce offerings.

In 2015, the largest e-commerce companies in India were Flipkart, Snapdeal, Amazon India, and Paytm.[6]

Market size and growth

India's e-commerce market was worth about $3.9 billion in 2009, it went up to $12.6 billion in 2013. In 2013, the e-retail segment was worth US$2.3 billion. About 70% of India's e-commerce market is travel related.[7] According to Google India, there were 35 million online shoppers in India in 2014 Q1 and is expected to cross 100 million mark by end of year 2016.[8] CAGR vis-à-vis a global growth rate of 8–10%. Electronics and Apparel are the biggest categories in terms of sales.

According to a study conducted by the Internet and Mobile Association of India, the e-commerce sector is estimated to reach Rs. 211,005 crore by December 2016. The study also stated that online travel accounts for 61% of the e-commerce market.[9]

By 2020, India is expected to generate $100 billion online retail revenue out of which $35 billion will be through fashion e-commerce. Online apparel sales are set to grow four times in coming years.[10]

India's retail market is estimated at $470 billion in 2011 and is expected to grow to $675 Bn by 2016 and $850 billion by 2020, – estimated CAGR of 10%.. According to Forrester, the e-commerce market in India is set to grow the fastest within the Asia-Pacific Region at a CAGR of over 57% between 2012–16.[11]

As per "India Goes Digital",[12] a report by Avendus Capital, the Indian e-commerce market is estimated at Rs 28,500 Crore ($6.3 billion) for the year 2011. Online travel constitutes a sizable portion (87%) of this market today. Online travel market in India is expected to grow at a rate of 22% over the next 4 years and reach Rs 54,800 crore ($12.2 billion) in size by 2015. Indian e-tailing industry is estimated at Rs 3,600 crore (US$800 million) in 2011 and estimated to grow to Rs 53,000 crore ($11.8 billion) in 2015.

Overall e-commerce market is expected to reach Rs 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.

A new sector in e-commerce is online medicine, selling complementary and alternative medicine or prescription medicine online. There are no dedicated online pharmacy laws in India and it is permissible to sell prescription medicine online with a legitimate license.

Online sales of luxury products like jewellery also increased over the years. 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.[13]


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, Rock.in, Seventy MM amongst others had to close down [14] or change their business models to survive.[15]


There are many hosting companies working in India but most of them are not suitable for eCommerce hosting purpose, because they are providing much less secure and threat protected shared hosting. eCommerce demand highly secure, stable and protected hosting. Trends are changing with some of eCommerce companies starting to offer SaaS for hosting web stores with minimal one time costs.

There could be various methods of ecommerce marketing such as blog, forums, search engines and some online advertising sites like Google adwords and Adroll.

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, HomeShop18, Snapdeal, Indiatimes shopping and Makemytrip. "Cyber Monday" is a term coined in the USA for the Monday coming after Black Friday, which is the Friday after Thanksgiving Day.[16] Most recent GOSF Great Online Shopping Festival was held during Dec 10 to 12, 2014.

In early June 2013, Amazon.com 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 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[17] Amazon has also entered grocery segment with its Kirana now in bangalore and is also planning to enter in various other cities like Delhi, Mumbai and Chennai and faces stiff competition with Indian startups.[18]


Examples of venture capital firms having invested in e-commerce companies in India are:

Flipkart.com raised about USD 2.3 billion.[19] On 10 July 2013, Flipkart announced it had received $200 million from existing investors Tiger Global, Naspers, Accel Partners, and ICONIQ Capital, and an additional $160 million from Dragoneer Investment Group, Morgan Stanley Wealth Management, Sofina, Vulcan Inc. and more from Tiger Global.[20]

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. May 2014 also witnessed an acquisition of Myntra by Flipkart reportedly for ₹2,000 crores.[21]

In September 2015, PepperTap raised $36 million from Snapdeal and others.[22]

Niche retailers

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 are registered daily and more than 25% are for niche businesses.[23]

During 2014, Royal Enfield sold 200 bikes of special series Online.[24]

Online apparel is one of the more popular verticals, which along with computers and consumer electronics make up 42% of the total retail e-commerce sales.[25] Niche online merchandising brands like Headbanger's Merch, Redwolf and No Nasties partner with and even help sustain independent musicians.[26] Some established brands like Arvind are now creating clothing lines just for the e-commerce markets.[27] 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.[28]

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.[29] Ekstop was acquired by the Godrej Group to complement their offline chain of Nature's Basket stores.[30]

See also


  1. "India's internet user base 354 million, registers 17% growth in first 6 months of 2015: IAMAI report". timesofindia-economictimes. Retrieved 4 May 2016.
  2. "Internet users in India to cross 500 mn in 2016: Prasad". Business Standard. 5 May 2016. Retrieved 23 May 2016.
  3. "Online shoppers in India". timesofindia.indiatimes/tech. 2014-11-20. Retrieved 2015-03-25.
  4. "Indian e-commerce at inflection point?". Vccircle.com. 2010-08-19. Retrieved 2013-07-04.
  5. "In COD we trust". translatemedia.com. 2015-02-06. Retrieved 2015-03-24.
  6. "Etail giants like Snapdeal, Amazon lose market share in 2015; small etailers emerge as real winners". The Economic Times. Retrieved 4 May 2016.
  7. Evolution of e-commerce in India, PwC, 2014.
  8. "Online shoppers in India to cross 100 million by 2016: Study". The Times of India. Retrieved 4 May 2016.
  9. "Online travel accounts for 61% of Indian ecommerce: IAMAI-IMRB study". MediaNama. 8 June 2016. Retrieved 18 June 2016.
  10. PTI. "India's fashion e-retail market to touch $35 bn by 2020: Google". Mint. Retrieved 2016-03-13.
  11. "Asia Pacific Online Retail Forecast, 2011 To 2016," Forrester Research Inc. Zia Daniell Wigder, with Steven Noble, Vikram Sehgal and Lily Varon.
  12. "404" (PDF). Retrieved 4 May 2016.
  13. "CaratLane in talks with US-based online stores for acquisition". timesofindia-economictimes. Retrieved 2016-04-05.
  14. "Discounts backfire; many e-com ventures shut shop". Business Standard. 26 February 2014. Retrieved 9 December 2014.
  15. "Latest e-commerce shut downs and acquisitions in India". 17 May 2014. Retrieved 4 January 2015.
  16. "Google partners e-commerce sites for 'Cyber Monday' on December 12". Economic Times. 4 December 2012. Retrieved 31 December 2012.
  17. "Amazon plans $3 billion investment in India to challenge Flipkart, Snapdeal". CNBC. 25 Jun 2016.
  18. "E – Commerce and its evolution in India | Devmantra". Retrieved 2016-04-28.
  19. "Fund-raise values Flipkart at $10 billion". Times of India. 24 Nov 2014.
  20. "Flipkart raises $160M more from Morgan Stanley, Vulcan Capital, Tiger Global, others". VCCIRCLE.
  21. "Flipkart acquires Myntra". The Times of India. 22 May 2014. Retrieved 4 May 2016.
  22. "PepperTap raises $36 million in fresh round of funding, led by Snapdeal". The Economic Times. Retrieved 4 May 2016.
  23. "E-commerce: Niche online ventures going where biggies of Amazon, Flipkart can't". The Financial Express. 28 April 2015. Retrieved 4 May 2016.
  24. "Royal Enfield's 'Despatch' sold out in 26 minutes". The Hindu. 2015-07-15. ISSN 0971-751X. Retrieved 2016-04-27.
  25. "Assocham India". Retrieved 4 May 2016.
  26. "Sahil Makhija: "At some point, a T-shirt will always outweigh a CD"". Rolling Stone India. Retrieved 4 May 2016.
  27. Suneera Tandon. "Arvind lines up select brands for online retail". Mint. Retrieved 4 May 2016.
  28. "VoxPop Clothing raises $1 million to expand portfolio with higher margins". timesofindia-economictimes. Retrieved 4 May 2016.
  29. "Mahindra Retail to integrate e-commerce business to single platform". timesofindia-economictimes. Retrieved 4 May 2016.
  30. Sapna Agarwal. "Godrej Nature's Basket buys online grocer Ekstop.com". Mint. Retrieved 4 May 2016.
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