E-COMMERCE

Industry

Group - 11 Section-B

189278001 - Neeraj Verma

189278006 - Apurv Nigam
189278021 - Rohit Garg
189278019 - Rakhi Tholia
189278092 - Anmol Agrawal
 Industry Overview
• India’s e-commerce industry is expected to surpass Sector composition by revenue with c.50%
the US to become the second largest e-commerce
market in the world by 2034 online sales contributed by electronics
• Main drivers of growth is supported by rising 3% 3%
8%
incomes and surge in internet users
• As of Dec 2018, internet subscribers in India stood 9%
at 604 million people which is expected to increase 48%
to 829 million by 2021
• Industry is increasingly attracting customers from
Tier 2 and 3 cities, where people have limited 29%
access to brands but have high aspirations
• Average online retail spending in India was $224 Electronics Apparels
per user in 2017 Home and Furnishing Baby, Beauty and Personal Care
Books Others
Size of e-commerce Industry is expected to
$bn grow by CAGR of 20% E-shoppers in India (mn) Online retail out of total retail
200 125 in India (2018)
95
150
55 3%
100 25
50
2017 2025 97%
0
2017 2020 2027 Metro & Tier-1 Tier II & below Offline retail Online retail
 PESTEL Analysis
Political
• Political and regulatory changes before the e-business have kept rising
• For example, few months back the Indian government stopped Amazon and Flipkart for
selling products of those companies they have equity stakes.
• Cybercrime can effect e-tailing business environment and government must fight against it
• Red Tape in India can become major difficulty for e-commerce industry trying to extend their presence
• Political chaos can result to disruption of business online and impact e-commerce industry and its
growth

Economic
• Economic factors are directly related to business and their effect is also direct on business revenue and
profits
• Consumer’s disposable income is increasing which is a great opportunity for e-commerce business
• Economic fluctuations since recession have affected business since spending decreased and people
adopted cost cutting measures
• Flourishing retail industry is an opportunity for e-retailers, but it also means more competition for them
Social

• Changing trends have impact on e-commerce business and online shopping has become a trend these
days.
• Social impact of e-commerce industry is that it making people lazy and the delivery system is taking
care of all their needs
• Cultural factors have an impact on how these businesses market themselves
• E-commerce is still seen as a sign of westernization in Indian society, due to which it has seen slow
growth in some parts

Technological

• Technological factors are very important in the context of e-commerce industry as it relies heavily on
technology
• From sales to customer service everything is based on technology
• Companies like Flipkart and Amazon are investing heavily in technology to find faster growth
• Cybercrime is a big threat for this industry. People share personal details and confidential payment data
• Amazon is ahead of other players in technology, which creates a competitive advantage for them
Environmental

• Direct environmental impact of this industry is very low

• The industry focuses heavily on sustainability, which can be highly productive
• Sustainable packaging, waste reduction and renewable energy are the areas where
e-retailers invest in sustainability. Eg – Use of e-vehicles for last mile delivery
• Ordering online requires less energy than driving to physical stores and buy or pick up groceries

Legal

• E-retail brands can become a target unless they take care of compliance
• Non compliance can lead to financial losses as well as loss of image and reputation
• There are many legal factors that can affect e-commerce industry - anti-trust laws, discrimination laws,
consumer protection laws for ecommerce businesses, data protection laws.
• Labor laws and sustainability laws are areas where e-retail brands have to focus on
• Another legal factor is EU GDPR (General Data Protection Regulations) affects all those companies who
collect customer data like name, emails and bank information
• The laws differ from market to market and compliance in every area is very important
 Porter 5 Forces – Ecommerce Industry
Bargaining Power of Suppliers Threat of Substitutes Bargaining Power of Buyers
Low - Moderate High High

• Small population of suppliers • Low switching costs • High quality of information

• Moderate forward integration • High availability of substitutes • Low switching costs
• Moderate size of suppliers • Low cost of substitutes • High availability of substitutes

Competitive Rivalry Threat of New Entrants

High Low

• High aggressiveness of firms • Low switching costs

• High availability of substitutes • High cost of brand development
• Low switching costs • High economies of scale
 DRIVERS
1. 3rd Party Logistics – Due to the complex nature of planning and execution of logistics ,
specially for a new player in the market, 3PL are coming as breathe of fresh air. 3PL is
financially as well operationally efficient for a lot of e-commerce player and hence it is
increasing competitiveness in the industry
2. Mobile apps and internet – Growth of mobile networks, affordable internet and
widespread usage of smartphones leading to a external push in e-commerce. It is directly
increasing the reach of e-commerce players and providing more options to the consumers.
3. Payment Options – With the surge of many payment options ranging from BHIM-UPI to the
likes of PayTM to the newest LazyPay, we are seeing exponential growth in online
transactions. Options in payment method encourages that the whole buying experience
goes smoothly and immediately.
4. Growth of Big Data – It’s the need to e-commerce players to focus more on the customers
that they intend to target which is leading to the use of Big Data. Companies use it to
customize and personalize their offerings as per customer and it is leading to increased
traffic on their sites and apps.
 Strategic Group Mappings
• The Variables used in mapping the E-tailers are the
Product Variety and Offers/ Schemes Strategic Group Mapping
• According to Euromonitor survey of Indian E- 6 Flipkart
Commerce industry , The flipkart is the largest
5
online retailer followed by Amazon India and
Myntra Amazon

Offers/ Benefits
4
• Other players of the Industry are quite smaller in Myntra
size compared to 3 major players. 3 Snapdeal
• In terms of offers/ financing schemes / cash backs
etc. Amazon India tops the charts. 2

• Also the Amazon India has the largest product

category followed by the flipkart and Myntra 1

• Also Amazon.in has the Net loss Margin of close to

130%. 0
0 1 2 Product
3 Variety
4 5 6
 Key Success Factors
• Access to Strong Distributor Network: High Logistics cost have an severe impact on the bottom line of the
online retailers and since the companies are unable to pass these costs to the customers having access to robust
distribution network is critical to survive in the industry. Hence the companies like Flipkart and Amazon have
started to add the fulfillment centers across India to reduce the delivery costs.

• Having Exclusive Private Label Brands: With the offering of private label brands Online retailers are able to offer
the exclusive products at good price in turn boosting sales revenues and customer loyalty. Private label brands
contribute significantly to the bottom line of the E-Tailers . The most popular examples are Amazon Basics by
Amazon which includes a wide range of products in Electronics and Furniture segment.

• Leveraging the Store Capability: Since the internet penetration in India still remains low , the store presence
plays an important role in expanding the reach of the online retailers. Although the growth of internet retailing
is much faster in India, it is the store model that is actually profitable. The Amazon Go stores are the prime
example of this trend.
 Industry Outlook Conducive for
Profitability ?
• E-Commerce Industry is expected grow tremendously in the coming years specially in the Tier-2
and Tier-3 cities but the incumbent firms are expected to face competitions from both national
and international players

• The Niche segments in the industry are proving to be particularly attractive where the e-Tailer are
able to charge premium for their differentiated offerings. For example Nykaa has the lowest net
loss margins in the beauty space and is expected to break-even

• E-Tailers need to maintain both offline and online presence to further increase the reach and to be
profitable eventually

• The Positive bottom line for the incumbent's firms look difficult to achieve as the logistics costs are
still high and tend to be directly related to the overall infrastructure of the company

• Hence, the firms need to be patient and focus on delivering differentiated offerings