Industry: E-Commerce

Group 4, Section D
Aristak Nagarajan (2019PGPH019) - +91 9083620163
Ibon Tarun Kataki (2019PGP176) - +91 7337403087
Karuna Shankar Upadhyay (2019PGP206) - +91 9062663138
Meghav Verma (2019PGP249) - +91 9910883329
Pragya Mandol (2019PGP302) - +91 8902237103
Radhika Pande (2019PGP291) - +91 8275491089
Shivani Anil Sharma (2019PGP387) - +91 8128982798
Wellington Daniel (2019IPM118) - +91 8072714520

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 EXECUTIVE SUMMARY
E-commerce is one of the fastest growing industries in India. It has transformed the way
business is done. It is propelled by factors such as smart phone penetration, decreasing cost of
internet, increasing support of government (such as Digital India), increasing receptivity of the
customers towards the e-commerce platforms and increase in the number of Safety Payment
Portals. This growth is only expected to grow further, with advances in different technologies,
such as artificial intelligence, machine learning, augmented and virtual reality and blockchain
technology.

The boost in the e-commerce sector has also facilitated growth of supplementary sectors such
as logistics and courier services.
There are also many developments in the e-commerce sector that have been happening very
frequently and that are potent accelerators or decelerators for the sector. For instance, the FDI
regulations of 2019 are aimed to promote the physical stores by curbing the autonomy that the
e-commerce can exercise. Similarly, many mergers and acquisitions that have been happening
in the sector are also an indicator of the potential the industry has.

The key observations from the e-commerce sector are indicating an increased focus on rural
growth and the digital drive to continue. The robustness and the prospects of the industry has
also ensured that it stand the test of GST. At the same time, the government policies have been
the centre of contention as the regulations try to limit the foreign E-commerce giants like
Amazon to create a level playing field among its local competitors and conventional retail
outlets.

The industry shows a competitive tilt towards fashion retail as E-commerce giants are eyeing
towards becoming the market leader in the sub-industry, locally in various markets as well as
globally. There have also been signs of luxury brands adopting the e-retailing path as E-
commerce industry shows an impressive amount of growth, especially in India. Internationally,
the E-commerce giants have been venturing into retailing consumer packaged goods as well,
as they pioneer and innovate newer ways to deliver quicker and fresher to the consumer.

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 TABLE OF CONTENTS
Topic Page No.
INDUSTRY PROFILE 4
I. Overview of the E-commerce Industry in India 4
(a) Growth over the last few years 5
(b) Present and future trends 6
(c) Major events related to the industry in the last 2-3 years 6
(d) Importance to the economy 6
II. An Overview of the B2C Market Players 7
III. Technological tTrends and Major Innovations 7
(a) Demand driven forecasting 8
(b) Blockchain 8
(c) Payment methods, UPI, NBFCs 8
(d) Delivery methods like drones 8
IV. Mergers & Acquisitions in the e-commerce industry 10
PLAYERS’ PROFILE 11
I. Flipkart India Pvt Ltd. 11
II. Amazon development Centre India Pvt Ltd. 11
III. Info Edge (India) Limited 12
IV. Snapdeal 13
V. MakeMyTrip 13
MACROECONOMIC PROFILE 14
I. Government Initiatives 14
II. Highlights and Impact 14
III. Industry Trends 16
(a) Competitive Fashion Scenario 16
(b) Growth prospect of Luxury Retail 16
(c) E-retailing Consumer Packaged Goods in Developed Countries 16
REFERENCES/DATA SOURCES 17-18

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 INDUSTRY PROFILE
I. Overview of the E-commerce Industry in India

(a) Growth over the last few years

The Indian e-commerce sector has experienced some of the strongest growth rates globally.
Growth will remain very strong but is expected to decelerate in the forecast period as the sector
matures slightly.

The Indian e-commerce sector had total revenues of $13.8bn in 2017, representing a compound
annual growth rate (CAGR) of 68.2% between 2013 and 2017. In comparison, the South
Korean and Chinese sectors grew with CAGRs of 10% and 31.1% respectively, over the same
period, to reach respective values of $29.7bn and $227.2bn in 2017.

Flipkart, Amazon India and Paytm Mall are the three biggest online retailers driving growth in
the sector. The rising disposable income of the Indian population which led to growing
consumption, as well as improved digital literacy, is a key driver of the online retail sector. The
boom of e-commerce in India has been in line with the rising adoption of smartphones and
mobile internet. The demonetization that occurred in India in the last two years had a positive
indirect impact on the online retail sector, as it spurred financial inclusion that facilitated online
transactions. What is more, the intense price competition between leading players in the sector,
engaging in heavy discounts and aggressive marketing policies, has stimulated demand. The
growth of the sector has been backed up by billions of dollars invested by leading online
retailers in India.

Mandatory digitalization of television broadcasting (implemented in 2011 and completed in

2013) spurred TV sales, although deceleration occurred in 2014 as consumers anticipated sales
tax changes with the election of Narendra Modi's Bharatiya Janata Party (BJP).

Customers have been won over by the convenience, variety and cheaper prices that online
apparel retailers can offer. This has led to growth in the online-pureplay channel which now
accounts for 3.8% of the apparel retail industry’s total value.

The penetration of online shopping in India, in terms of internet users, is still low, thus there is
ample room for growth. Growth in the number of new online shoppers is likely to have already
peaked in marginal terms in 2017, due to the rapid pace of early adoption; however, for the
majority of the population, particularly in terms of rural areas, this is less likely. Strong growth
of the disposable income of Indian households will increase internet penetration, as well as the
engagement of Indian consumers in online shopping with regards to purchasing frequency.

The biggest shopping festival in India was created in 2014 – Big Billion Days runs in the lead
up to Diwali and in 2018, online retail grew more than 60% compared to the previous year to
$2.3bn.

(b) Present and Future Trends

The current rise of the sector is usually attributed to the following trends:

 Online marketplaces

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  M-commerce
 Digital marketing and social shopping
(https://blog.spiralytics.com/past-present-future-ecommerce)

Online marketplaces: These platforms have created ease not just for the customers, but also
for vendors and marketers. With a wide variety of offerings and publicly available testimonials
of different products, there is also an added layer of confidence in the customer.

M-commerce: One of the biggest and most vital developments in the e-commerce sector has
been the buying and selling of products and services through handheld devices. This has given
the marketplaces more opportunity to interact and engage with the customers, especially with
push notifications.
Digital marketing and social shopping: Digital marketing has brought about a revolution with
bridging the gap between companies and consumers by facilitating direct communication
between them. The companies do so by increasing their presence on places or apps where
people are likely to be present or spending more time. This is especially useful for the young
demographic who keep their mobile phones on hand. Additionally, social networks have also
started encouraging online purchasing on their platforms. With the amount of time the
millennials spend on social media networks, this is a very useful strategy to reach out to a
greater number of people.

II. An overview of the B2C Market Players

As per a report by financial services expert Morgan Stanley, the e-commerce sector
is expected to increase by about 1200% to $200 billion by 2026, up from $15
million in 2016. This is sure to bring a positive change to the industry waiting for
wonders to turn around the table.
This can be attributed to the following changes in e-commerce:
• Digital India Campaigns: With the enhanced inline infrastructure facilitated
by increased internet connectivity in remote areas, promoted by the Indian
government, the number of internet users is growing rapidly. As a result, an
increased number of smartphones are available at throwaway prices, internet plans
have become very cheap and online users are converting into e-commerce
customers on a daily basis.
• Streamlined Logistics: With courier companies looking for smarter ways to
deliver seller’s goods and the e-commerce companies having GPS tracking
applications in place, logistics are getting more and more streamlined by the day.
The courier aggregators also offer shipment services at lower costs with efficient
tracking.
• Safe Payment Gateways: Instant transfers, one-touch payments, e-wallets, and
more are the latest trends. The Indian banks, too, provide enough support to the
users to make the payments safer and more streamlined.
• Easy Returns and Exchange: Product returns and exchanges have been made
a lot easier. Massive returns and exchanges added to the logistics cost which was
an additional burden for e-commerce companies. But, with the advent of various

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 courier aggregators, the RTO (return to origin) rates are 10-15% less than the
forward charges. This has enabled e-commerce companies to offer better services
to their customers.
(c) Major events related to the industry in the last 2-3 years
The biggest event in recent history to impact upon the e-commerce sector would be
the FDI rules that are intended to provide level-playing field to the physical stores.
These came into effect since February 2019.
Under this regulation, companies are barred from selling their products exclusively
on online platforms. Also, online entities with foreign investments are not allowed
to offer products that are sold by retailers in which they hold equity stake. E-
commerce giants like Amazon and Flipkart are also mandated against stocking a
quarter of their inventory from a single vendor. The online marketplaces are also
debarred from offering deep discounts.
According to India Today (February 2019), “The move has already caused a
shakeup in operations of Walmart-owned Flipkart and Amazon, even though both
companies have either denied commenting on the issue or "welcomed" the FDI
policy wearily. A draft analysis by analyst firm PwC brought out a revelation that
the new e-commerce policy could result to a $46 billion or over Rs 3.2 lakh loss in
terms of sales by 2022. While both e-commerce outlets are busy adhering to fit in
to the new structure, customers should know that the major players have removed
a large volume of products from their website.”
(d) Importance to the Economy
According to The Indian economy grew by 7% in October-December 2016 and was
expected to grow at 7.1% in 2016-17. The e-commerce industry which was worth
Rs 1257 billion in 2015 was estimated to be contributed about 1% of GDP.
According to the segment-wise estimates for the share in GDP, the B2C e-
commerce segment accounted for 0.16% of India’s GDP in 2013.

II. An overview of the B2C market players

Amazon eBay Flipkart Snapdeal ShopClues Paytm

India India
Launched/ 2013 2013 2010 2011 2014
Founded
No. of 50,000+ 30,000+ 30,000+ 200,000+ 300,000+ 50,000+
Sellers
Product 35 30+ 70 500+ 6500+ 500+
Categories
No. of 30 million 1.1 million 30 million 15 million 35 million NA
Products
Market 15% <10% ~44% ~32% <10% <10%
Share

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 Profit/Loss Loss of NA Loss of Loss of Loss of Loss of
(FY14-15) INR 17.24 INR 20 INR 13.19 INR 1.01 INR 3.72
billion billion billion billion billion
Source: National Report on E-commerce Development in India (2017), UNIDO
(https://www.unido.org/sites/default/files/2017-10/WP_15_2017_.pdf)

According to a report by KPMG, “e-tail and allied sectors, like logistics, warehousing, IT/ITeS
expected to create direct employment for around 1.45 million workforces by 2021, a significant
jump from the 23,500 jobs which existed in 2012.” This signifies a direct employment
opportunity of 1.45 million. The sector is also expected to create 0.4 million corporate and
technology jobs by 2021. The sector can also be credited for employing 80-90% of the e-
commerce logistics workforce engaged in last mile (which includes people with basic or no
qualification).
Other contributions of e-commerce in generating employment and improving socio-economic
work environment:

1. 20% of the total online sellers are women

2. 70% of the online sellers to come from smaller towns
3. 0.3 million employment opportunities in villages
4. 63% of the e-commerce ventures by first time entrepreneurs

III. Technological Trends and Major Innovations

(a) Demand driven forecasting

Demand forecasting is a basic function that impacts companies around the world overall
industries. Not only is demand forecasting basic to driving out wasteful aspects within the
supply chain, but it also influences all aspects of the company on an enterprise-wide premise.
Foreseeing future demand decides the amounts of raw materials, amount of wrapped up
merchandise inventories, number of items that have to be transported, number of individuals
to hire, number of plants to construct, right down to the number of office supplies that ought to
be acquired. Demand estimates are essential since the essential operations process, moving
from the suppliers' crude materials to finished goods to the consumers' hands, takes time,
especially in our current global economy. Companies cannot basically hold up for request to
happen and after that respond to it with the correct item at the right time. Amazon incorporated
a “method and framework for expectant shipping” in 2013. This implies that, instead of just
depending on inviting or reminding clients to rehash their purchases, Amazon is testing with a
handle that can foresee a customer’s shopping list and provide the items to their closest
fulfillment centre – indeed before the order is placed. Although this marvel is still in its
exploratory stage, able to effectively see its disruptive potential should it be executed on an
industry-wide scale. Such advances have the potential to take information analytics to the next
level and permit companies such as Amazon to extend their client base manifold whereas
improving client dependability to a large extent. Anticipatory shipping certainly has the power
to spare the client’s time and effort as they are free from unremarkable errands such as shopping
for family fundamentals and having to travel to markets. Demand driven forecasting is
something which many industries are working on at the moment.

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(a) Blockchain
Blockchain isn’t controlled by any central authority which essentially implies that the buyer
and vender only control blockchain operations. In this way, no third party can see over or
control your transactions. Blockchain currencies can’t be swelled or cheapened by any bank or
government, as is the case with other monetary standards. For instance, in case the economies
of a nation were to break down nowadays, their currencies would horrendously suffer which
isn't the case with bitcoin since geopolitics don't impact its operation. Cryptocurrencies based
on blockchain technology don’t uncover the identities of the executing parties. Still, these
exchanges are exceptionally straightforward as centralized record stores the subtle elements
and give visibility to transactions. Blockchain has the power to revolutionize the e commerce
industry because it brings in more trust from the user, it helps in very fast transactions and
helps maintain transactions of very large scale.

(b) Payment methods, UPI and NBFCs

Faster and safer payment methods are necessary for e commerce companies. The following
paragraphs discuss the possibility of new types of payments which are coming up in the future
Unified Payments Interface (UPI) is a framework that powers numerous bank accounts into a
single mobile application, merging several banking features into one app. It too caters to the
“Peer to Peer” collect ask which can be planned and paid as per necessity and convenience.
Some e-commerce sites have already started to use e-commerce while others will incorporate
this soon as the UPI in India is a big success as a payment method.

A recent news article in the Economic Times read that the Indian e-commerce giant Flipkart is
all set to enter the monetary services space with a focus on offering credit and insurance items
to both buyers and sellers on its platform. According to the report, the company has now started
the process of applying for a Non-Banking Money related Company permit and will commence
its fintech administrations with microlending and micro-insurance for purchases on its site. In
the long run, the company plans of moving to items such as general and life insurance, past its
platform.

(c) Delivery methods like drones

Right now, the global e commerce monsters like Amazon and Alibaba, all are turning their
interest within the utilization of drones in commerce. It is not so far in the future that these
kinds of delivery methods will reach India and we will be getting products delivered by drones
and robots instead of people.

IV. Mergers and Acquisitions in e-commerce industry

Fabmart.com is often considered as India’s first e-commerce company. Founded by K.

Vaitheeswaran in the year 1999, the company was an innovation in terms of the way it operated

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and many considered it to be a new idea which will die without much ado. However, this new
idea of e-commerce was embraced by the Indians and within 20 years, the Indian e-commerce
industry has grown to $50 billion-plus industry. The ever-increasing average incomes coupled
with rise of consumerism and willingness to buy of Indian consumers has benefited the Indian
e-commerce businesses the most as at present, it is one of the fastest growing industries’ in
India. The growth has not gone unnoticed as the foreign investors are lurking around looking
to make investments in the sector.

India is one of the largest and most profitable market for the foreign investors if the investment
is done through the native Indian companies. This is the reason why strategic and financial
investors from across the world, with huge amounts of capital at their disposal, are looking to
grab a piece of the profit by venturing into Indian e-commerce industry courtesy mergers and
acquisitions. The most recent of such deals in the market has been the acquisition of Flipkart
by global giant Walmart Inc. With the deal valuation of $16 billion, it is the biggest deal in the
history of e-commerce. With Walmart and Amazon’s rivalry being no secret, the latter did not
lag behind as they acquired More, the fourth biggest supermarket chain in India, from Aditya
Birla Group. The recent developments indicate that more such deals would follow, thus leading
to huge foreign investments in the Indian e-commerce industry.

Walmart Inc. acquired 77 percent shares in Flipkart for $16 billion, while the rest of the 23
percent is still with the other subsidiaries and the founders. When the acquisition of the Indian
e-commerce giant was announced by the global retail leaders, Doug McMillon, Walmart’s
president and CEO said, “India is one of the most attractive retail markets in the world, given
its size and growth rate, and our investment is an opportunity to partner with the company that
is leading transformation of eCommerce in the market.”
Despite 77 percent stake in the company, Walmart allowed Flipkart to maintain distinct brand
and operating structure, which is a hint of the essence and importance of indigenous brands
and home-grown names in the sector. Walmart has been operating as a separate entity in the
country and their own business does not have a very big share in the Indian e-commerce market.
However, the maintenance of the brand image of Flipkart and its association with the brand is
expected to reflect in terms of their rise in the business as well. At the same time, the extra $2
billion funding that Walmart has provided to Flipkart has ensured that they are able to rage the
price war and challenge global market leaders Amazon.

The growth of ecommerce industry in India is not just because of the factors stated in the
previous paragraphs. Rather, there are many related factors which have led to rise in the
business of the ecommerce companies in India. Be it technological advancement or cheap and
affordable data services being provided by the telecom operators, the Indian government’s
Digital India policies or encouragement of payments being made on the digital gateways, these
are some of the factors which have had a direct influence on the rise of the industry. All the
above stated factors have provided impetus to the already rising ecommerce firms and needless
to say, the firms have made use of all these factors very effectively. With huge scope for profits
and growth, the larger firms have been looking for consolidation and strengthening of their
own business and one of the convenient ways to do so is by acquisition of the comparatively
smaller firms. As the entry barriers into the e-commerce industry are very stiff, it is a wise

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decision by the companies to make sure that the existing challengers are acquired while the
aspiring challengers will find it difficult to enrol into an industry which is kind of oligopoly at
present.

Flipkart has been one of the biggest players in the ecommerce industry and at present, it has
the highest share in the Indian e-commerce market. The way adopted by Flipkart itself is that
of acquisitions. Founded by the Bansal maestros, Sachin and Binny Bansal in the year 2007,
the company initially focused on the consumable. Myntra was showing its promise as a rising
fashion brand and Flipkart was interested to increase its horizon and enter into fashion
divisions. They acquired Myntra in 2014 to announce their arrival in the fashion and lifestyle
segment. The acquisition of Jabong in 2016 further strengthened its position as the leader in
the above stated segments, making it an enviable entity with a great vision. With the two
acquisitions stated above, not only was the Flipkart’s stronghold on the market strengthened
but also the competition for its own fashion and apparel segment was reduced by a large extent,
providing it a free run in the above stated segments. At present, Flipkart finds itself acquired
by an even larger entity, which is a testimony of the promise that mergers and acquisitions hold
in the present ecommerce industry.

While the leaders in the consumables, fashion and apparel as well as other common industries
have shown the will to acquire and grow, other segments of the ecommerce industry have not
been left far behind in this. Ibibo Group merged with MakeMyTrip Group in 2017, with them
being the fiercest rivals in the online travel industry. The synergies of the merger have been
positive with both the groups showing considerable growth ever since the merger. In a similar
fashion, taxi aggregator Ola acquired Taxi for Sure for a whooping $200 million, in order to
derive an edge over quintessential rivals Uber. The cab aggregator also acquired Food Panda
to challenge Uber Eats, the food delivery wing of its rival. This is a very clear indicator of the
fact that mergers and acquisitions are the way forward for the ecommerce companies at present.

The significant growth and sustained investments within the Indian ecommerce business have
conjointly attracted the sustained interest of the Indian government, that is seeking to seek out
ways in which to control it while not disincentivising investment in a very sector that's turning
into progressively savoury for international investors and, consequently, a growing contributor
to the nation’s coffers. the govt recently discharged a draft ecommerce policy in a very bid to
control varied aspects of ecommerce from foreign investment to information protection to
competition problems. However, the policy has drawn severe criticism from varied
stakeholders, and latest reports indicate that the policy might have a considerable relook. Given
the scale and importance of the ecommerce business, however, it's solely a matter of your time
before the govt puts in situ a regulative framework, though business expectation is that the
framework ultimately demanded can stay industry-friendly.

The growth of ecommerce industry in India has been exponential within a very small-time
framework, with the industry on verge of reaching a phase when the market leaders are
emerging to make the industry a complete oligopoly. The established players are looking to
consolidate and one of the best ways to do so has been through mergers and acquisitions in
order to ensure long term success. With no signs of any decline in the industry, the numbers
and amount of such deals are expected to go up further.

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 PLAYERS’ PROFILE
There are several E-Commerce players in the Indian Market, and a brief overview of some of
them is provided below.

I. Flipkart India Private Limited

Flipkart is an online ecommerce retail store which was founded by Sachin Bansal and Binny
Bansal in October 2007. It focuses its operations and sales in the Indian Market. While it is
registered in Singapore, Flipkart is still headquartered at Bengaluru.

Although Flipkart has been in the E-Retail business conventionally, talks of it expanding its
arsenal have been recent. In the form of ' Digiflip, ' Flipkart's own product line, the first step
towards this development emerges. Further, there have also been contemplations about Flipkart
targeting Amazon Prime by launching its own subscription-based model to provide streaming
services along with priority retail.

Market Share: Flipkart’s market share lies at 31.9 % while that of the Amazon is at 31.1%.
This is majorly because of the large group of Flipkart with Myntra and Jabong. Flipkart has its
market in its home country only.

Parent Company: Walmart with a 77% stake. In 2018, the American retail giant Walmart
purchased a majority 77% stake in Flipkart, for a whopping $16 Billion at a valuation of $21
billion, providing the dwindling Flipkart a new opportunity to recapture its market.

Subsidiary Companies: Myntra, Jabong, Ekart, PhonePe and Jeeves are the subsidiary
companies of Flipkart.

Product Dominance: Flipkart has a dominance in fashion, clothing, and Smartphones with its
hold in Myntra and Jabong.
Trade: Flipkart is not yet listed

Financial Performance: Total assets (Mar 2017): Rs 4,738.58 Cr ; PBIDT (Mar 2017) Rs -
178.48 Cr

II. Amazon Development Centre India Pvt Ltd.

Amazon is an American multinational technology company with international headquarters in

Seattle, Washington, USA. It launched in India in June 2013 and is one of the fastest growing
online marketplaces in the country.

Market Share: Amazon’s market share in India as per gross merchandise volume (total sales
dollar value for goods sold) as per a Forrester report published in May, 2019 is 31.2 per cent
as compared to Flipkart’s 31.9 per cent share (excluding subsidiaries Myntra and Jabong)
Parent Company: Amazon.com, Inc.
Subsidiary Companies:

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Product Dominance: Its focus is e-commerce, cloud computing, artificial intelligence and
web services. Amazon India provides a common marketplace for a huge variety of products
ranging from apparels and consumables to electronics and appliances. Amazon Pay, Amazon
Music, Amazon Prime Video and Amazon Web Services also fall under the ambit of services
that they provided.
Over the last six years, Amazon India has doubled its delivery network to more than 1400
delivery centres in more than 750 cities. It has doubled growth in states of Andhra Pradesh,
Assam, Bihar, Uttar Pradesh, Maharashtra, Gujarat, Jharkhand and West Bengal.

Trade: Amazon made its Initial Public Offering in 2000 and currently is trading on NASDAQ
at US $1839.34 per share.
Financial Performance: Total assets at US $162,684 million, as of 2018.

Some major competitors of Amazon in the Indian marketplace are Flipkart, Jabong, Myntra
and Snapdeal. Reliance Jio is having discussions with Netflix and Amazon prime along with
other OTT platform to make an annual deal to use their channels.

III. Info Edge (India) Limited

Info Edge (India) Limited is a holding company, which provides information technology
services. It was founded in 1995, and went public in 2006. It prides on being one of the few
pure internet-based E-Commerce companies of the country. The Company is involved in online
classifieds business. Its segments include Recruitment Solutions, 99acres, Online Restaurant
Discovery and Others. The Others segment includes Jeevansathi and Shiksha services. It is the
largest listed Indian E- Commerce Company with a market capitalization of Rs. 25330 Crores
on BSE.

Service Verticals: The Company is engaged in the business of Internet-based service delivery
operating in over four service verticals through Web portals. Its service verticals include
Naukri.com for recruitment-related services, Jeevansathi.com for matrimony-related services,
99acres.com for real estate-related services, Shiksha.com for education-related services,
meritnation.com for online/offline coaching services and zomato.com for online food services.
It also offers placement search services, resume sales services and real estate broking services.
Trade: Info Edge is listed on BSE and NSE. Info Edge has held a bullish trend ever since being
listed, and has provided a lot of dividends to its investors as well. A notable fact about Info
Edge’s stock is that it trades in significantly larger volumes on the NSE than on the BSE, and
given the nature of the two exchanges, this implies that the stock is traded mainly as an
investment, rather than as a trading instrument.

Financial Performance: Total assets (Mar 2019): Rs 2,328.97 Crores; PBIDT (Mar 2019) Rs
424.18 Cr

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 IV. Snapdeal

Snapdeal.com was started by Kunal Bahl and Rohit Bansal in February 2010, with a wide
assortment of more than 60 million products across 600 categories. It includes regional,
national and international brands and retailers.

There is talk of SoftBank, Japanese multinational, leading a funding round of $100 million (or
₹711crore) in Snapdeal. An estimated $60 million will be invested by SoftBank and the
remaining by other smaller investors. SoftBank feels there is scope for a third large e-commerce
company in India after Flipkart and Amazon. Their chances of success are higher following
downfall of ShopClues.
Market Share: Snapdeal has a market share of 32 percent.
Parent Company:
Subsidiary or Partener Companies: Till date, Snapdeal has partnered with several global
investors and individuals such as Alibaba, eBay, Intel Capital, Mr. Ratan Tata, among others.
It bought out Freecharge in 2015 for $400 million but resold the payments company in 2017.
Product Dominance: Snapdeal caters to the Indian market with products like apparels,
electronics, appliances etc.
Trade: Not listed on any exchange

Financial Performance: Snapdeal suffered a slump in between but now, revenues are up by
73 percent (to ₹925 crores) and losses have fallen by 70 percent (to ₹186 crores), as of 2018-
19.

V. MakeMyTrip

MakeMy trip Limited, founded in the year 2000 by Deep Kalra, is an online travel company
in India. It has its headquarter in Gurugram, Haryana. In the beginning, the company
launched its services in US in order to fulfill the needs of Indians residing in US for their
India-US travel. Later they started their services in India 2005 and started providing non-air
services like hotel bookings, holidays packages etc.
Market Share: After the acquisition of smaller rival GoIbibo in the year 2016 and earlier
acquisitions, MMT is leading towards a dominant market share. MakeMy trip & GoIbibo
dominates with 42% & 33% market share repectively in online travel bookings.
Parent Company: MakeMy trip India’s parent company is the Mauritius based Nasdaq-
listed company MakeMy trip. MakeMy trip India contributes to 85% of its revenue.
Subsidiary Companies: Ibibo, Redbus, ITC Group, Hotel Travel Ltd., Luxury Tours and
Travels Pte Ltd.
Product Dominance: MMT has a product dominance in the online travel bookings because
of its differentiated pricing.
Trade: Its parent company MakeMy trip Limited is listed on Nasdaq.
Market Capital:
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MakeMy trip has a market capital of $2678m.
Latest financial performance indicators:
Gross Bookings increased 31.9% YoY in 3Q19 to $1.4 billion. Revenue for 3Q19 was $124.8
million and Adjusted Revenue increased 31.4% YoY in 3Q19 to $179.9 million. Revenue in
year 2018 was $675 million.
Financial performance indicators:
As at December 31, 2018, the balance of cash and cash equivalents and term deposits on their
balance sheet was $300.9 million. As of 31st December 2018, company’s total assets are
$1,580,445,000 of which non-current are $1,151,560,000 and current are $1,580,445000.
Total equity and liabilities: 1,580,445
Loss after tax: 127,490
EBITDA: For the year 2018 it was -186.7m US dollars. Till march 2019, it is -36.6m US
dollars.

MACROECONOMIC PROFILE
I. Government Initiatives
Since 2014, the Government of India has announced various initiatives namely, Digital India,
Make in India, Start-up India, Skill India and Innovation Fund. The timely and effective
implementation of such programs will likely support the growth of e-commerce industry in the
country.
Some of the major programmes undertaken by the government to promote the e-commerce
sector in India are as follows:

• In order to elevate the participation level of foreign players in the e-commerce field, the
Indian Government hiked the limit of foreign direct investment (FDI) in the E-commerce
marketplace model for up to 100 per cent (in the B2B models).

• The heavy investment of Government of India in rolling out the fibre network for 5G
will help boost ecommerce in India

• In the Union Budget of 2018-19, government has announced allocations upto Rs 8,000
crore (US$ 1.24 billion) to BharatNet Project, to provide broadband services to 150,000 gram
panchayats.Moreover, as of August 2018, the government is working on the second draft of e-
commerce policy, incorporating inputs from various industry stakeholders.
Restrictions have been levied on foreign dominant E-commerce players restricting them from
selling products from firms they have a stake in. They are also not allowed to strike exclusive
deals with sellers.

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 I. Highlights and Impact

Increased focus on rural: The government has always been supporting rural growth in the
past and we expect this to continue this year as well. While we have had positive initiatives
like MGNREGA, increase in the MSP for select crops, focus on electrification of villages, we
could see additional support to farmers by way of with financing arrangements, farm loan
interest waivers, farm credit arrangements. We could also expect investments in farmer-
friendly technologies to boost crop yields

Riding the success of GST: We have witnessed GST getting established over the last year
with continuous rationalization and reduction of rates across categories. We expect that the
GST slabs may further get simplified, with slabs for products to be consumed by the masses
and agro-chemicals getting additional GST benefits. The introduction of GST has seen existing
FMCG/ consumer durable companies continuing to grow and show higher profitability, thereby
helping them to invest new capital for growth in India. With simplified tax structures, stability
in custom duty regime and a less aggressive tax administration, we expect new entrants/
investors in the FMCG space in the next few years.

The Threshold for income tax exemptions to increase: This has been in talks for long with
several leading industry bodies asking for an increase in the income tax basic exemption limit.
Various industry bodies have also suggested raising the deductions limit under Section 80C.
This could drive an increase in disposable income, which is directly linked to increased
spending power. In case the government does oblige the industry in general by the reduction
of the corporate tax rate, it could have a positive effect on market sentiments.

Digital drive to continue: The current government’s heavy investment in rolling out the fibre
network for 5G will continue to boost e-commerce in India. Recent investment in the Digital
India and Skill India initiatives coupled with increased disposable incomes are driving
consumption in the economy. Further, relaxed FDI regulations, coupled with efforts towards a
cashless economy through demonetization as well as GST will drive overall growth. In all, we
could expect the budget to provide further impetus for digital payments like UPI, credit cards
and debit card payments.

E-commerce policy changes: The draft e-commerce policy under consideration and other
changes in FDI relating to Ecommerce is aiming to create a level-playing field for offline and
online players in the Indian market. This is a positive step as this could help in curtailing non-
competitive practices, see increased participation of MSMEs and thus aiding in the survival
and growth of small retailers in India.

MSME sector: This Budget may also focus on the growth of small and medium enterprises as
they can support the nation’s need to generate significant employment across sectors and
provide necessary growth in GDP. Enabling entrepreneurship is key and changes such as
simplifying compliance procedures, easing working capital requirements and encouraging
investments can energize the sector tremendously.

Tech start-ups: Agri-tech start-ups have the potential for faster scale-up and funding in this
area has not been easy. The Budget may consider a larger special startup growth fund’ to
support emerging start-ups This will help in boosting the startup ecosystem immensely and
with the government looking at the liberalizing the startup regime further in the context of tax
benefits, eligibility conditions, etc., the future looks good.

15
Lastly, the interim budget this year could centre around the common man and his needs,
consumers, consumption and measures around rekindling the investment cycle.

II. Industry Trends

(a) Competitive Fashion Scenario

E-commerce has presented promising avenues in fashion as major players in the market are
aiming to become the leader in the segment.
For example, Amazon, with an estimated total share of more than 8 percent, is on course to
become the leading apparel retailer in the United States. Flipkart has a 40 percent share of
online fashion sales in India. However, the potential for profitable growth fuelled by user
acquisition is starting to saturate due to market maturity and increased competition. The next
horizon in platform evolution is business model diversification through proprietary technology
and knowledge to enrich the offering to brands and consumers. The race is set to be underway.
(b) Growth Prospects of Luxury Retail

After analysing observations of the online-sales trajectories of more than 50 luxury brands over
the past decade, it is speculated that luxury brands would aim to expand in the E-commerce
domain.
Taking into account the Luxury sector’s trends and experiences of a few noteworthy industries
that are more mature in their digital development, such as mass fashion and consumer
electronics, it's forecasted that the global luxury e-commerce market will go along the lines of
the individual esteemed brands. Its expected luxury’s share of online sales to double from 6 to
12 percent by 2020. By 2025, the online share of total luxury sales is set to be €70 billion
annually, worth about 18% share, making e-commerce the world’s third-largest luxury market,
after China and the United States.

(c) E-retailing Consumer Packaged Goods in Developed Countries

While e-commerce has deranged the retail sector with vibrant new marketplaces and shopping
tools, quite strikingly, one sector was for a long time blissfully above the blast area: consumer
packaged goods (CPG). In fact, CPG had such less online competition that in 2013, online
accounted for less than 1 percent of total sales in packaged food and about 3 percent in non-
food areas, according to Euromonitor.
Now, however, those days appear to be over: some of the most innovative experiments in e-
commerce are now occurring in the CPG sector. In the past year alone, for example, Amazon
has floated out tests of Amazon Pantry, which lets its Prime users fill a box with selections
over 2,000 products and ship them for a small fee; Prime Now, which offers home delivery
options effectively within one or two hours; and the Dash Button, an Internet-connected device
placed anywhere in the home that provides a one-touch way to order refills. And it’s not just
Amazon that’s blooming a digital CPG trail. Campbell’s is customizing soup packages for
millennial shoppers, and Regional grocers are finding success with “click and collect” pilots in
which products are ordered online and picked up in stores.

16
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