Thestateofecommerceinindia April2014 140410021035 Phpapp01

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India e-commerce

Accel Partners

2014


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Contents

S.No. Content Slide Number

1. Summary 3 - 9

2. Current Market Information 10 - 18

3. Trends 19 - 21

4. Growth Factors 22 - 25

5. Payments 26 - 27

6. BRICs comparison 28 - 31

2


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Contents


1. Summary 3 - 9


3. Trends 19 - 21


5. Payments 26 - 27


3


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Executive summary

4

$2Bn2013

$8.5Bn2016P

Online Shopping defined in this presentation does not include travel, ticketing and food ordering only physical goods commerce

Online shopping of physical goods in India, will grow to $8.5Bn in 2016.

Number of online shoppers in India will more than double to 40M.

Key finding

2x Indian shoppers X 1.1x number of orders per year per shopper X 2x average order value

63% CAGR

KEY FINDING

25% CAGR

20M

40M

CY2013 CY2016P

Indian online shoppers will double

Accel estimates and Industry sources


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$278 M$559 M

$2,811 M

CY2012 CY2013 CY2016P

Fashion + Footwear + Accessories GMV

INR 1,080

INR 1,860

INR 3,600

CY2012 CY2013 CY2016P

Increasing average order value

Executive summaryKey findings

5

67%

25%CAGR

KEY FINDING

1. Last year there was a significant jump in averageorder value as there was a penetration of newcategories like jewellery, home dcor etc.

2. Also, users are becoming more comfortablebuying higher priced items online.

100%Growth

71%CAGR

1. Last year was the rise of the fashion category fashion e-commerce GMV doubled since 2012.

2.

Given the young demographic which is shoppingfor latest looks online and increasing choiceonline we estimate that this category will see400% growth in the next 3 years and rivalelectronics and mobile category in GMV.

Accel estimates and Industry sources

Average order values climbing up rapidly

Fashion category doubled last year


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Executive Summary

7

Trends: Rise of EMIs Wallets

With increasing order values, we are seeing an uptick of EMI payments

3rdparty wallets albeit a new phenomenon, have a strong value proposition andwill be quick to become popular similar to China

TRENDS

60%

16%12% 12%

1% 0%

50%

12%15%

11%5% 7%

COD Credit Cards Debit Cards Net banking EMI 3rd party wallets

Indian payment landscape - rise of EMIs and Wallets(Total: 100%)

2013 2016P

Accel estimates, Accel portfolio companies and Industry sources: PayU, EMVantage


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Executive summary

8Online Shopping defined in this presentation does not include travel, ticketing and food ordering

More penetration in Tier-II and Tier-III towns

New shoppers will come from the 40M+ Gen-Y FB users

1. Tier 2 cities growing much faster in eCommerce

adoption than Tier 1

2. Some states completely lagging in ecommerce,

waiting for infrastructure to be put in place

1.

Potentially 40M shoppers between ages of 19 24 years, will start spending money online

2. These shoppers also have a propensity tospend more money than Gen-X shoppers

Growth factors

20MGen-Y

shoppers

20MGen-X

shoppers

GROWTH FACTORS

Accel estimates, Google, Facebook, NSSO, Accel portfolio companies


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Enough headroom for growthOnline retail is still a very small portion of retail in India

9

Online sales,4 Mn, 2%

Offline sales,243 Mn, 98%

247Mn mobiles shipments in India CY2013

Online sales,

45 Mn, 7%

Offline sales,555 Mn,

93%

600Mn books sold in India CY 2013

Online sales,$0.08 Bn, 0.2

Offline sales,$44.92 Bn,

99.8%

USD 45Bn jewellery sales in India CY 2013

Online sales,$0.5 Bn, 1%

Offline sales,

$42 Bn, 99%

USD 43Bn fashion + footwear sales in India CY 2013

Accel estimates, Accel portfolio companies and industry sources: CMR, FICCI, Deloitte

GROWTH FACTORS


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Contents


1. Summary 3 - 9


3. Trends 19 - 21


5. Payments 26 - 27


10


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Growth of India online shopping

12

Market Trends Growth Factors Payments BRICS

140 M213 M

400 M

CY2012 CY2013 CY2016P

Internet users in India

Accel estimates, Accel portfolio companies, comScore & IAMAI


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13


140 M213 M

400 M

CY2012 CY2013 CY2016P


% of internet users who visit e-commerce sites = 60%

3.00%

2.70%

2.90%

CY2012 CY2013 CY2016P

Conversion from visitors to buyers India e-commerce market will start maturing

and display characteristics similar to China which traditionally has higher conversion rates(nearly 3.5%)

This is due to e-commerce being only choice foravailability of goods in parts of the country and

easy payment options like COD which are notproblems in western countries


k d G h CS


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14


140 M213 M

400 M

CY2012 CY2013 CY2016P



As e-commerce sites gain trust, users arebeginning to order more frequently

Also, repeat users acquired more than 1yr old- are more comfortable ordering online andorder significantly more than first time buyers

4M

5M

12M

CY2012 CY2013 CY2016P

# of orders per month

3.00%

2.70%

2.90%

CY2012 CY2013 CY2016P

Conversion from visitors to buyers

1.501.55

1.70

CY2012 CY2013 CY2016P

Orders per buyer per month

India e-commerce market will start maturingand display characteristics similar to China which traditionally has higher conversion rates(nearly 3.5%)

This is due to e-commerce being only choice foravailability of goods in parts of the country and

easy payment options like COD which are notproblems in western countries


M k T d G h F P BRICS


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15


140 M213 M

400 M

CY2012 CY2013 CY2016P



Last year there was a significant jump inaverage order value as there was apenetration of new categories like jewellery,home dcor etc

Also, users are becoming more comfortablebuying higher priced items online

4M

5M

12M

CY2012 CY2013 CY2016P


3.00%

2.70%

2.90%

CY2012 CY2013 CY2016P


1.501.55

1.70

CY2012 CY2013 CY2016P


$18

$31

$60

CY2012 CY2013 CY2016P

Average order value


M k t T d G th F t P t BRICS


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16


140 M213 M

400 M

CY2012 CY2013 CY2016P



Last year there was a significant jump inaverage order value as there was apenetration of new categories like jewellery,home dcor etc

Also, users are becoming more comfortablebuying higher priced items online

4M

5M

12M

CY2012 CY2013 CY2016P


3.00%

2.70%

2.90%

CY2012 CY2013 CY2016P


1.501.55

1.70

CY2012 CY2013 CY2016P


$18

$31

$60

CY2012 CY2013 CY2016P

Average order value$816 M

$1,983 M

$8,519 M

CY2012 CY2013 CY2016P

Annualized online shopping GMV




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Other observations

17


1. ~200M of Indians will come online in next 3 years

2. Majority of these will come online on

smartphones

3. E-Commerce companies are building their

brands, thus gaining trust of users

1. Existing shoppers shop more number of times

than new shoppers (in that year)2. As Indias e-commerce market grows the

proportion of existing shoppers will increase from

30% (in 2013) to 50% (in 2016)

13M

20M

40M

CY2012 CY2013 CY2016P

# of online shoppers in India

3.4

3.2

3.55

CY2012 CY2013 CY2016P

# of orders per customer / year

Accel estimates & Accel portfolio companies



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E-commerce is a small sliver of Indian retail

18

91.0%

8.7%

0.3%

Unorganized retail Organized retail - offline Organized retail - online

92.0%

7.8%

0.2%

2012 2013


Accel estimates & Deloitte


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Contents


1. Summary 3 - 9


3. Trends 19 - 21


5. Payments 26 - 27


19



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MobileThere is a traffic to revenue gap on mobile e-commerce in India

20

Factors leading to major adoption of mobile as a channel:

70% of the growth in Indian internet users was mobile only

Showrooming a growing habit

Reasons why there is not a 1:1 conversion of traffic to mobile:

Most e-retailers do not have mobile optimized sites

Most transactions are for low ticket items

Mobile marketing budgets are < 10% of overall digital marketingbudgets, even though they have increased 100% Y-o-Y, eventhough overall ad spends have increased 20% Y-o-Y

23%27%

33%

9% 10%

33%

India China Japan

Mobile revenue share is lagging mobiletraffic share in India and China

Mobile Traffic %

9%

4%

N/A

9.8%

India Brazil Russia China

India vs rest of BRICS - mobile shopping GMV as % ofoverall GMV

1x 8x 27x

2012 2013 2016

Mobile shopping grew 800% in 2013, weexpect it to grow at a 150% CAGR till 2016


Accel estimates, Accel portfolio companies, CNNIC and other industry sources



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$122 M / 1x$511 M / 4x

$3Bn / 24x

2012 2013 2016P

Women influenced GMV

Women shoppers a growing force

21

Male Female

Women spend 60% more timeon jewellery sites than men

Male Female

Women spend 40% moretime on fashion sites

1.3x 1.1x1.0x

Luxury/Jewellery Apparel Home furnishings

Women spend upto 30% more time onluxury sites than on home furnishing


15% ofmarket

26% ofmarket

35% ofmarket

1.

Working women segment grew 43% in 2013 andconstitutes nearly 10% of Active internet users in

India according to i-Cube & IAMAI

2. Categories like baby care, home dcor, jewellery

etc have traditionally been influenced by women

decision makers. As more choice become

available more women are shopping online.

Accel estimates, Accel portfolio companies & comScore


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149M

132M 132M

102M

19M

40M

20M 8M

13%

30%

15%8%

0%10%20%30%40%

50%60%70%80%90%100%

0M

20M

40M

60M

80M

100M

120M

140M

160M

13 - 18 19 - 24 25 - 30 31 - 36

20M new shoppers could come just from the 19-24 age group

India population FB users (2013) FB users %

Young India will become dominant presence in e-Commerce

23


Young Indians (19-24yrs) are more comfortable with online services e.g. FB and thus could

potentially add upto 40M new shoppers in next 3 years if we just take the Facebook users

Accel estimates, NSSO, Facebook


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Categories

Books

7%

Mobile, Tablets &Accessories

35%

Computers,Cameras,

Electronics &Appliances

18%Health &

Personal care2%

Babycare3%

Fashion, Footwear& Accessories

28%

Jewellery2%

Home dcor3%

Others2%

Categories by GMV (%)

Books21%

Mobile,Tablets &

Accessories

9%

Computers,Cameras,

Electronics &Appliances

10%Health &

Personal care4%

Babycare8%

Fashion,Footwear &Accessories

35%

Jewellery

1% Homedcor8%

Others4%

Categories by # of trxns. (%)

Books category contributed to 21% of

the transactions but only 7% of the GMV




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Contents


1. Summary 3 - 9


3. Trends 19 - 21


5. Payments 26 - 27


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Payments

27

COD

60%

CreditCards16%

DebitCards11%

Net

banking12%

EMI1%

2013


With most e-commerce players launching their wallets, we believe that 3rd

party wallets will become a significant alternative to COD in coming years.

COD50%

Credit Cards12%

Debit Cards15%

Net banking11%

EMI5%

3rd partywallets

7%

2016P



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Contents


1. Summary 3 - 9


3. Trends 19 - 21


5. Payments 26 - 27


28

Market Trends Growth Factors Payments BRICs


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Indian online shopping has tremendous growth potentialSignificant headroom for growth

29

1,249

200144

1,358

21399 66

59117%

50%46% 44%

0%10%

20%

30%

40%

50%

60%

-

500

1,000

1,500


InMillions

Only 17% of Indians are online, compared to >40% for other countries

Population Online population Internet penetration %

213

9966

591

19 31 30

280

9%

31%

45% 47%

0%

20%

40%

60%

80%

100%

-

100

200

300

400

500600

700


i

n

i

o

only 9% of online Indians shop, compared to >30% in other countries

Online population Online shoppers Online shopper penetration %

Market Trends Growth Factors Payments BRICs

Accel estimates & Industry sources

Market

Trends

Growth Factors

Payments

BRICs


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BRICs B2C online shopping marketIndia is quite small compared to rest of BRIC countries

30

$ 1.8 Bn / 1x$ 13 Bn / 7x $ 16 Bn / 9x

$ 106 Bn / 60x


Indian e-Commerce market is $1.8Bn, 60x smaller than the Chinese market

$ 93

$ 421

$ 533

$ 380


annual spend by an Indian online shopper is $93 - 4x smaller than Chinese one

y

Accel estimates & Industry sources


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Disclaimer

The information and opinions in this Report have been prepared or complied by ACCELPARTNERS and are subject to change/modification without any notice. The informationcontained in this Report is believed to be accurate at the time of date of issue of thisReport, but no representation or warranty is given (express or implied) as to its accuracy,completeness or correctness. ACCEL PARTNERS accepts no liability whatsoever for anydirect, indirect or consequential loss or damage arising in any way from any use of orreliance placed on this material for any purpose. The contents of this Report are the

copyright of ACCEL PARTNERS. Nothing on this Report constitutes advice, nor createsany contractual relationship.

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