1. Presented By:Taha MirzaVatsal SolankiUllash KutiyarVaruna SinghYudhister SingareddyVaishali KumarCMBA4

2. Re-Birth of E-Commerce in India India is at the cusp of a digital revolution. Internet has become an integral part of this growing populationsegment. Ernst & Young in their 2012 Report conducted a research study on theIndian E-Commerce Sector. 3. MethodologyThe report focused on the key e-commerce segments- travel, retail andclassifieds.Ernst & Young conducted comprehensive interviews with the foundersand senior executives of Indian e-commerce companies. 4. Summary E-commerce grew almost 50% in the last 5 years. Venture Capitalists have demonstrated their faith in the e-commercegrowth of this country. Online travel- The largest e-commerce sub-sector is expected to grow asmany travel players are diversifying their offerings. Online Retail Segment has evolved and grown significantly. CoD hasbeen the key growth drivers. Classifieds, the earliest entrant is undergoing a shift in their operationalmodel 5. E-Commerce- OverviewServices provided under the various modes of e-CommerceC2CB2CB2B 6. Key StakeholdersE-CommercePlayerBuyerSupplier 7. Key Stakeholders (Cont.) The three stakeholders coordinate among each other to facilitate the 3main flows in an e-commerce transaction:Product FlowInformation FlowMonetary Flow 8. Market Evolution in India 9. B2BDirectory1stWaveOnlineMatrimonialOnlineRecruitmentOnlineClassifiedsOnlineTravel2ndWaveOnlineRetailSNSGroupBuying 10. E-Commerce Market Size in India 11. E-commerce EcosystemPros Annual disposable income per household to grow by two-and-a-half times by 2015 Discretionary spending expected to form a major portion of expenditure in India Proliferation expected in the sales of PCs, tablets and smartphones More Indians increasing time spent online Probability of growth in internet user base, mirroring that of the voice user base Volume and average value of transactions higher for credit cards than debit cards Increase in the number of payment options Cons Low average broadband speed and flat average internet speed cause for concern Online payment landscape marred by low penetration of credit and debit cards; high failure rate of onlinepayment transactionsCons Low average broadband speed and flat average internet speed cause for concern Online payment landscape marred by low penetration of credit and debit cards; high failure rate of onlinepayment transactions 12. First to Second Fundamental Enablers Falling in placeInternet is the key to the development of e-Commerce. Internet user base has been growing significantly, with anexponential increase in internet usage. The adoption of 3G, coupled with the declining prices ofsmartphones. Improvements on the payment front have brought about theincreasing use of plastic money by Indian consumers. Payment gateways have now been made more secure throughmultiple levels of authentication via one-time passwords (OTPs)and transaction passwords. 13. Devices Increased PC penetration Increasing smartphone and tablet market Declining PC, tablet and Smartphone costsReasons Increased Disposable Income of Indian ConsumerAnnual disposable income per household is expected toincrease at a CAGR of 5.1% from 2005 to 2025 . 2005 US$2 2015 US$3,823 2025 US$6,790 Technological advances increasing the penetration ofdevices 14. Internet Internet penetration in India among the lowest in the world. Internet penetration in India was 11.4% as of June 2012, one of thelowest worldwide. Area of Concern Places it high on the Governments agenda The National Telecom Policy2011 (NTP2011) is a step toward increasingtechnology adoption in the country. 15. Statistics More Indians coming online... India crossed the 100 million internet user figure in 2010 and reached 121million users by end 2011, making it the third-largest country worldwide interms of its internet population. The number of internet users in India is expected to triple to 300 million by2015, growing at a CAGR of 25.5%14. The frequency of internet usage has increased in parallel to the growth ininternet user base. Time spent by Indians on internet has been increasing over the years. Theaverage time spent online per person per month rose from 12.9 hours in 2006to 17.4 hours in 2011. It is forecast to increase to 21 hours by 2015. 16. Graph 17. Shift In Access Points There has been a progressive shift in access points used to log on tointernet. Previously, cybercafs were the primary access point andaccounted for 52% of internet usage in 2003. Over time, people have increasingly been accessing internet fromhome, with the segments share growing by more than 60% between2009 and 2011 to account for 37% of internet usage in the country. 18. The shift in internet access points Convenience Security Consumer analysis 19. Internet Usage and User. Continuous reduction in the cost of internet access. The tariffs of data plans and prices of data cards/USB dongles are on adecline, thus reducing the total cost of ownership (TCO) of an internetconnection. Internet penetration is growing in towns with population of less than0.5 million. 20. Cons - Low average broadband speed and flat average internet speed causefor concern. India ranking low in average speed and peak average speed ofbroadband connections. Solution-3G are expected to change this scenario. 21. Mobiles Consumers becoming mobile The mobile internet user base is growing, aided by the introduction of 3Gdata plans and declining smartphone prices. E-Commerce needs to work on User experience on e-Commerce websites also needs to be improved, sincemost of these sites are not optimized for use on mobile devices.Not all e-Commerce sites have developed mobile apps. 22. Payment Landscape has gone a seaChange The number of cards per capita in India is a mere 0.2 and is among thelowest in the world. The success rate in online transactions a concern area for e-Commercein India RBI could look at playing a key role in monitoring the performance ofpayment providers ( to keep a check on failed transaction) 23. Credit Card/Debit Card PaymentsMode Usage of Credit cards is declining and debit cards is on the rise . But average value of credit card transactions still higher than that ofdebit card transactions Payment Options Are Increasing The number of internet banking users increased to account for 7% ofthe total number of bank account holders in 2011 as compared with 1%in 2007 24. Conclusion E-Commerce players are banking on the Indian internet growth story. Thefact that an average online user is spending more time online gives theseplayers the opportunity to draw more users to their websites throughinnovative marketing strategies such as those revolving around social media. They should focus on developing mobile-compatible websites andapplications. E-Commerce players also need to focus on innovation to tackle challengesarising from low credit and debit card penetration. The RBI could step in and reduce the number of online transaction failuresby defining service metric quality and monitoring it at regular intervals. 25. Online TravelTicketing Hotel Reservations Tour PackagesAirNon-Air(Train/Bus) 26. Online Travel Growth in Indias travel and tourism industry the second largest in theworld. Online travel- The largest e-commerce sub-sector is expected to grow asmany travel players are diversifying their offerings. Low Cost Carriers Ticketing sales are the largest in the online travel market. 27. Complex Tax Structure For Retail Sector InIndia Central Sales Tax (CST) Value-added Tax(VAT)Non-uniform VAT rates levied by state governments,CST charge on inter-state sales and the retention ofVAT in case of inter-state stock transfers make itchallenging to decide warehouse location. In addition tothese taxes, certain states or local municipalities levy entrytaxes and Octroi, respectively. 28. Implementation Of Goods & Service Tax(GST)Online retailers are looking forward to the implementation ofGoods and Services Tax (GST), Since it would help iron outmost of the tax issues.CST and VAT will be subsumed in the GST this would ensure:1. Uniform rate of GST on a product across all of the states.2. GST to be creditable against IGST, which will be levied oninter-state transfer of goods. 29. Challenges Of Online Retail Market Lack of touch-and-feel a mental barrier for onlineShopping. Increased competition with the entry of globalPlayers. Low margins prompting e-Commerce players to lookat new business models. 30. Top Categories Driving Online Retails:Categories PercentageBooks 44%Clothing/Accessories/shoes 36%Airline tickets/Reservation 32%Electronic equipment 27%Tours/hotel reservation 26%Cosmetics/nutrition supplies 22%Event tickets 20%Computer hardware 19%Videos/dvds/games 18%Groceries 18%Music 16% 31. Top Reasons Driving Online Retail1. Cash on delivery(COD)-ANecessary evil.2. Discounts, Convenience andValue-added services. 32. Online Classified The online classifieds segment is expected to overtake theoffline classifieds sector by 2012. Online recruitment is the largest category in the online classifiedssegment, followed by online matrimonial. The big fat Indian wedding industry is providing new sourcesof revenues to online matrimonial companies. The evolution of the real estate classifieds segment is dependenton how well it piggybacks the growth in Indian real estate. 33. The online classifieds market in India grew at a CAGR of 29%from 2008 to 2011. The major sources of revenues for the online classifieds segmentdepends on the segment and are listed below:RECRUITMENT REAL ESTATEMATRIMONIALAUTOMOBILESB2BMarket Size And Revenue Source 34. Online Recruitment classifieds The segment offers various benefits Reduced advertising costs Employees are increasing their budget for online recruitment Job seekers can send salient features through their mobile phones. 35. Matrimonial classifieds The online matrimonial classified market grew from US$36.9million in 2009 to nearly US$63 million in 2011. More than 100 matrimonial sites in the country. It is the second-largest category in Indias online classifiedssegment. 36. Online real estate and auto classifieds a small portionof online classifieds The online real estate and auto classifieds segments had a market size of US$21.2million, with a market share of 14% of the online classifieds sector, in 2009. online real estate classifieds segment has seen slow growth due to real estateagents being largely computer illiterate. Demand for real estate is expected to grow at a CAGR of 19% between 2010 and2014. Need to provide users a rich experience, e.g., through virtual tours of propertiesand the ability to finalize deals on the online platform. online auto classifieds segment is a recent entrant in the second wave of e-Commerce in India. majority of car buyers or sellers prefer to buy or sell cars through used cardealers and personal contacts. 37. Challenges in online classifieds segment Lack of vernacular content:- Majority of the online classifieds content inIndia is in English. But, 58% of the urban literate population in India in 2009was non-English literate. Credibility of information:- online recruitment and matrimonial classifiedsspace, there have been plenty of instances of fake profiles and profiles withincorrect information. Preference of offline agents:- Due to the high value of transactions involvedin the property and automobile market, majority of the real estate and carbuyers take the services of an offline realtor or a car dealer. 38. Cloud surrounding e-Commerce laws in India e-Commerce is a rapidly growing market in India, and domestic as well asinternational players are looking to tap the opportunity in the sector. No specific e-Commerce laws in India The sector is governed by the IT Act 2000, which regulates the legal obligations ofsellers and buyers of goods and services in cyberspace. e-Commerce laws in India need to comply with other statutory laws in force inthe country, e.g., the Indian Contract Act and Foreign Investment Regulations. e-Commerce companies also need to comply with banking and financial laws,where applicable. 39. Low entry barriers leading to reduced competitiveadvantages The rapid growth of the e-Commerce sector is attracting newplayers. Attracting entrepreneurs to secure funds easily. operational aspects such as free shipping of products and COD,which were differentiators earlier, have now become hygienefactors. 40. Rapidly changing business models Business models have been changing rapidly in the e-Commerce sectordue to high competition and price. Some businesses, such as online DVD rentals, have gone intoobsolescence. providing deals at high discounts, have now begun selling products. players in the e-Commerce space need to adapt to changing businessmodels and innovate constantly to sustain their businesses. 41. Urban phenomenon Indias e-Commerce market is mainly restricted to urban areas. Internet usage in rural areas is limited. Rural areas account for 70% of the countrys population. 42. Customer loyalty e-Commerce players offer huge discounts to lure people to shoponline. Indian consumer looks for the lowest price before making apurchase. Challenge for players in their effort to develop sound strategies toattract and generate repeat customers. 43. Investments in E commerce Early stage funding in the e-commerce sector in India has also picked up witha few companies providing seed-funding and series A funding. The rapid growth of e-commerce has attracted new players. Companies are looking to acquire customers by selling below the cost price. Mainly competing on price to overcome competition at the expense ofinvestors funds. Several VCs are investing in the e-Commerce space because they feel this isthe right time to invest. Government made a landmark announcement allowing 51% FDI , anannouncement applauded by e-commerce players assumed that this wouldattract foreign investments in B 2 C e-commerce 44. Investments in E commerce However, the initial euphoria was short-lived, since theDepartment of Industrial Policy and Promotion (DIPP), an arm ofthe Ministry of Commerce and Industry, later clarified that thismandate does not apply to B2C e-Commerce retail and isapplicable only to retailers with brick-and-mortar operations. Players opinion about the governments decision on not allowingFDI in B2C e-Commerce retail is mixed. 45. Thank You