Heading? Dion Global Solutions Published: Sep 2014 EMISPDF in-ximbhub from 59.145.200.102 on 2014-09-19 08:02:29 BST. DownloadPDF. Downloaded by in-ximbhub from 59.145.200.102 at 2014-09-19 08:02:29 BST. EMIS. Unauthorized Distribution Prohibited. www.dionglobal.com 2 Quick facts Sources: Crisil, Dion Research and Analysis What constitutes online retail? The online retail market in India comprises six broad segments, which further has five sub-segments and approximately 42 players within, making the space one of the most complex and competitive in nature, Online ticketing or travel account for approximately 65% of the total online retail sales in India in 2013
The broader segments Ticketing for air, rail, bus travel, hotels/ cruises, travel packages, movies, events Retail products sold through the online route Platforms where sellers and buyers transact online. Does not include classifieds Deals are purchased online by consumers Includes car, job, property and matrimonial portals Travel Specialist Retail Marketplaces Online Deals Other Portals 65% 17% 17% 1% Negligible Total Online Retail Sales in India =US$13 billion (2013) Note 1: % of total online retail sales in India 2013 EMISPDF in-ximbhub from 59.145.200.102 on 2014-09-19 08:02:29 BST. DownloadPDF. Downloaded by in-ximbhub from 59.145.200.102 at 2014-09-19 08:02:29 BST. EMIS. Unauthorized Distribution Prohibited. www.dionglobal.com 3 The growth story Indias online retail industry has grown at a swift pace in the last 5 years from around US$2.5 billion revenues in 2009 to US$13 billion in 2013, translating into a compounded annual growth rate (CAGR) of over 50% The 9-fold growth came on the back of increasing internet penetration, changing lifestyles and convenience of shopping and was primarily driven by books, electronics and apparel segments According to a primary research conducted by Dion Global Solutions, convenience of shopping and attractive pricing schemes are primarily driving the growth of online shopping in India Online retailers save huge operational costs of running physical stores, which they pass on to the consumers in the form of discounts Typically, Indian customers can save 20-30% per item if they shop online 2.5 4.9 6.2 8.5 13.0 2009 2010 2011 2012 2013 Online Retail in India Market Size (US$ Billion, 2009-2013) Sources: Crisil, Dion Research and Analysis EMISPDF in-ximbhub from 59.145.200.102 on 2014-09-19 08:02:29 BST. 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Unauthorized Distribution Prohibited. www.dionglobal.com 4 The comparative picture Where online segment stands in Indias overall retail landscape Overall retail market in India: US$520 bn Organised retail market in India: US$39 bn Online retail market in India: US$13 bn Sources: Crisil, Dion Research and Analysis In terms of size, Indias online retail industry currently constitutes a miniscule portion as compared with both organised and overall (organised and unorganised) retail industry landscape As of December 2013, the organised retail constitutes approximately 7.5% of the overall retail and online part constitutes approximately 2.5% of the overall retail and 33.3% of organised retail Industry analysts expect the online retail industrys revenues to more than double to around 18% per cent of organised retail by 2016 from around 8% in 2013, based on current demand scenerio Yet, its share of the overall retail (organised and unorganised) pie is expected to be just over 1%, comparing with 9-10% in the US and UK, and around 4-5% in China It's very simple. A large section of Indian consumers are not yet ready to trust and buy online. The e-commerce industry is yet to build that trust or need. Till this gap is bridged, there will be a huge disparity between the number of Internet users versus the number of online buyers. In the US, 85 per cent of online users transact online versus 8-10 per cent in India: Ashish Jhalani, Founder, Etailing India EMISPDF in-ximbhub from 59.145.200.102 on 2014-09-19 08:02:29 BST. DownloadPDF. Downloaded by in-ximbhub from 59.145.200.102 at 2014-09-19 08:02:29 BST. EMIS. Unauthorized Distribution Prohibited. www.dionglobal.com 5 Impact of online retail on traditional retailers Sources: Crisil, Dion Research and Analysis 39 23 1 15 2009-10 2010-11 2011-12 2012-13 Net Store Additions for Traditional Retailers (Number of Stores, 2009-2013) Over the last couple of years, competition from online retailers such as Flipkart (in books, music and electronics segments), Myntra and Jabong (in apparels) has eaten into the revenues of physical retailers Specifically, competition in the last three years has been intense compelling many established traditional retailors to go online even as their net store additions slowed to a single digit growth The impact of online retail is most visible in segments where the product specifications are standard and differentiation remains low, such as books, music and electronics segments Failing to match the huge discounts offered by online retailers, traditional booksellers and music stores are either shuttering outlets or folding up A case in point will be Planet M it has been closing stores since 2012 ; as a part of this restructuring, PlanetM has adopted a kiosk- based model for expansion Note: Number of stores includes the Shoppers Stop Department stores and Speciality Stores (viz Home Stop, Mothercare, Crossword Bookstores, Arcelia, Mac, Clinique, Estee Lauder & Airport Business). It also includes stores of Trent and the ones operated by JV Inditex Trent Retail India Private Limited EMISPDF in-ximbhub from 59.145.200.102 on 2014-09-19 08:02:29 BST. DownloadPDF. Downloaded by in-ximbhub from 59.145.200.102 at 2014-09-19 08:02:29 BST. EMIS. Unauthorized Distribution Prohibited. www.dionglobal.com 6 The leading segments (1/2) Sources: Crisil, Dion Research and Analysis 1 Electronics and Fashion After electronics, fashion and lifestyle is the largest category in online retail, with a 25% share Unlike electronics, however, it is more the domain of specialists than marketplaces Myntra, part of Flipkart, and Jabong are the leaders, competing with discounts and for exclusive brand partnerships Myntra has gone a step ahead and launched several private labels, including Roadster and Dressberry While external brands give a margin of up to 35%, in-house labels go up to 55% Jabong, which has exclusive partnerships with international brands and designers, is also lining up its own labels 2 Furniture Furniture is becoming the third largest segment in e-commerce, after electronics and fashion and lifestyle Pepperfry and Urban Ladder are the leaders, while among marketplaces, Snapdeal has launched, and Flipkart and Amazon are exploring It is, however, difficult to build a traction in this space as existing players took nearly two years to build perfect logistics and supplies EMISPDF in-ximbhub from 59.145.200.102 on 2014-09-19 08:02:29 BST. DownloadPDF. Downloaded by in-ximbhub from 59.145.200.102 at 2014-09-19 08:02:29 BST. EMIS. Unauthorized Distribution Prohibited. www.dionglobal.com 7 The leading segments (2/2) Sources: Crisil, Dion Research and Analysis 3 Grocery With an estimated market of $350-400 billion, the grocery segment is larger and dyanamic than anything else One needs to build hyper-local sourcing, warehouses and supply chain to succeed in this business and therefore, expansion across regions is staggered On an average, Online players stock 12,000-13,000 products, against some 400-500 odd by local kirana stores EMISPDF in-ximbhub from 59.145.200.102 on 2014-09-19 08:02:29 BST. DownloadPDF. Downloaded by in-ximbhub from 59.145.200.102 at 2014-09-19 08:02:29 BST. EMIS. Unauthorized Distribution Prohibited. www.dionglobal.com 8 The Specialists Sources: Singapore Tourism Board, Dion Research and Analysis Healthcare is one segment where niche portals have managed to build strong franchisees While the focus of Healthkart is protein supplements and personal care, that of Lenskart is eye care, which currently does around 2,000 shipments per day of both prescription glasses and sunglasses, up from 600 in 2013 Other startups in the healthcare segment include Healthadda, Healthgenie and Saralhealth
FirstCry FirstCry is a specialist in babycare and kidswear products "Globally, and in India, the babycare category has always had a specialised leader that has captured dominant market share. With repeat buying rates above 70%, this category has huge capital efficiency in marketing," says Manik Arora, MD of IDG Ventures Indi, an early investor in FirstCry FirstCry is also is partnering international brands to provide free hospital kits to parents of newborns in about 6,000 hospitals in top 18 cities Healthkart and Lenskart Jewelry During the time when the physical stores struggle with growth, Caratlane, the leading player in this segment, is doubling by the year According to Mithun Sacheti, Founder & CEO of Caratlane, The biggest challenge in jewellery retailing is the cost of inventory. We don't maintain inventory and follow just-in-time manufacturing, which allows us to spend on marketing and on acquiring new customers."
EMISPDF in-ximbhub from 59.145.200.102 on 2014-09-19 08:02:29 BST. DownloadPDF. Downloaded by in-ximbhub from 59.145.200.102 at 2014-09-19 08:02:29 BST. EMIS. Unauthorized Distribution Prohibited. www.dionglobal.com 9 About Dion Global Solutions Dion is a leading provider of research, information, and technology solutions in the financial domain globally. Dion's aim is to take the pain and risk out of financial technology in a constantly changing market, by providing a consistent, reliable and approachable source of value added solutions. From flexible pricing models, to fuss-free implementations, Dion's business model is about providing a straightforward approach that is responsive to client needs and enables them to turn financial technology into real business opportunities.
The company draws on its presence across the financial markets, the depth of its global expertise and the breadth of its product development resources to serve the specific and localised needs of its clients. Dion continually strives to make available new solutions that deliver the value that clients are looking for, both through in-house development and strategic acquisitions. As a result, Dion is the single source for a comprehensive and developing range of solutions, from which financial services firms can select those that meet their business needs both now and in the future. The company has over 550 clients in more than 80 countries supported by a worldwide staff of 600, including 200 in product development. Company provides solutions that span investment, retail and commercial banking, institutional trading and investment and private client wealth management and stock-broking. EMISPDF in-ximbhub from 59.145.200.102 on 2014-09-19 08:02:29 BST. DownloadPDF. Downloaded by in-ximbhub from 59.145.200.102 at 2014-09-19 08:02:29 BST. EMIS. Unauthorized Distribution Prohibited. www.dionglobal.com 10 This report and information contained in this report is solely for information purpose and may not be used as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. The investment as mentioned and opinions expressed in this report may not be suitable for all investors. In rendering this information, we assumed and relied upon, without independent verification, the accuracy and completeness of all information that was publicly available to us. Dion global solutions limited and its affiliates shall not be liable for any direct or indirect losses or damage of any kind arising from the use thereof. Opinion expressed is our current opinion as of the date appearing in this report only and are subject to change without any notice Disclaimer EMISPDF in-ximbhub from 59.145.200.102 on 2014-09-19 08:02:29 BST. DownloadPDF. Downloaded by in-ximbhub from 59.145.200.102 at 2014-09-19 08:02:29 BST. EMIS. Unauthorized Distribution Prohibited. www.dionglobal.com 11 EMISPDF in-ximbhub from 59.145.200.102 on 2014-09-19 08:02:29 BST. DownloadPDF. Downloaded by in-ximbhub from 59.145.200.102 at 2014-09-19 08:02:29 BST. EMIS. Unauthorized Distribution Prohibited.