Comprehensive Pack

E-Commerce

1
• Industry Overview :3
• Sourcing and Inventory Models : 10
• Online Grocery : 12
• Big Basket : 19
• Grofers : 31
• Jiomart : 35
• Online Furniture and Handicrafts : 38
• Flipkart Vs Amazon : 47
• Snapdeal : 63
• B2B E-Commerce : 71
• Future Trends : 86

2
 Industry Overview

3
 Indian E-commerce industry grew 4.5 times between 2014 to
2020.

OVERALL INDUSTRY SIZE AND GROWTH

Source: https://www.statista.com/statistics/792047/india-e-commerce-market-
size/
4
 KEY E-COMMERCE SEGMENTS
B2C E- Retail (Sale of Products) • Flipkart, Amazon, Jiomart

B2B • IndiaMart, Udaan, Just Dial

Online Ticketing
• Makemytrip, Bookmyshow

Food Delivery • Swiggy, Zomato

Social Commerce • Meesho, Dealshare, GlowRoad

Information Portals • Bharat Matrimony, Magicbricks

Service Commerce • Urban Company, Housejoy, Helpr

5
 E-COMMERCE : GROWTH DRIVERS

•Aggressive discounts and Ease of return

•Increase in internet and smart phone penetration

•Better entrepreneurial ecosystem over the last decade.

•Easy funding to e-commerce companies

•Availability of wide variety of products online

•Cash on delivery

•Low penetration of e-commerce (only 2% to 3% of overall retail)

•Growth in smaller cities, semi-urban and rural areas

6
 Users from Tier-2 towns and below form the majority of E-
Commerce users in 2020.

Source: https://www.livemint.com/industry/retail/the-new-
battle-zone-of-need-based-etail-11626276467339.html
 Share of categories sold online has significantly changed in the last
few years

SHARE OF CATEGORIES IN E-RETAILING

Product Categories Share in Revenues

2010-11 2020-21 2024-25

Electronics 70-75% 50-52 % 35-40%

Fashion (Apparels, Accessories, 15-20% 30-35% 35-40%

Shoes etc)

Books 10-15% 2-3 % 1-2%

Groceries Negligible 5 to7% 15 to 20%

Others (Jewellery, Furniture, Negligible 10-15% 15 to 20%

Pharmacy, General Merchandise,
Toys etc)

Source: Industry Interactions, Media Reports

8
 Profitability highest in lifestyle products; greater scale results
in better margins

ONLINE SEGMENT WISE GROSS MARGINS

Product Gross Margins

Categories (Percent)
Clothing, Shoes, 35 – 40%
Accessories,
Watches
Electronics 12-14%
Grocery 18 to 20%
General 20 to 22%
Merchandise
Books 10 to 15%

Source: Industry Interactions, Media Reports

9
 Sourcing and Inventory Models

10
 Drop shipping model, On-demand sourcing model, Stocking
model.

Drop Shipping Model

•Zero inventory
•Ecommerce platform connects the seller and buyer
•May facilitate Logistics
• Market-place model is a drop shipping model
Stocking Model
•Ecommerce platform maintain inventory.
On-demand Sourcing Model
•Pull-based model
•Ecommerce platform buy from the seller after receiving customer order, do quality
check and deliver to the customer.
•Very Less inventory
11
 Online Grocery

12
 Online grocery retail is expected to grow eightfold between 2020
and 2025.

ONLINE GROCERY : GROWTH TRENDS

Market Size in US $BN

Source: https://www.livemint.com/industry/retail/the-new-battle-zone-of-need-based-etail-
11626276467339.html
13
 Online grocery players followed either inventory based model
or hyper-local model.

ONLINE GROCERY : BUSINESS MODELS

Business Models

Inventory Based Hyper-Local

Model Model

14
 Many players entered the grocery segment between 2012 to 2015
through hyper-local model.

TREND BETWEEN 2012 TO 2015

•Between 2012 to 2015, many players entered through the hyper-local due to:

•lower funding requirements.

•the order delivery time is relatively low

•easy to scale operations geographically

15
 MARGIN COMPARISON (ILLUSTRATION) : INVENTORY
MODEL VS HYPERLOCAL MODEL

INVENTORY MODEL HYPERLOCAL MODEL

•Average Customer Order Size: Rs. 500
•Average Customer Order Size: Rs. 250
• Gross Margin (20%): Rs. 100
• Gross Margin (5%): Rs. 12.50
• Inventory costs (5%): Rs. 25
• Inventory and Warehousing costs
• Warehousing and Overheads: (5%):
(0%): Rs. 0
Rs. 25
• Transportation cost per order: Rs. 20 • Transportation cost per order: Rs. 30

•Transport cost as % of Order Value: •Transportation cost as % of Order

4% Value : 12%
• Average Profit per order: Rs.30 • Average loss per order: Rs. 17.50

16
 Apart from lower margins, hyper-local players also face the
problem of inventory tracking and quality.

DISADVANTAGES OF HYPER-LOCAL MODEL IN GROCERIES

• Lower Margins

• Do not have the ability like inventory based players to offer

attractive discounts.

•Limited product variety

•Lack of real-time inventory as they tied up with Kirana Stores

• Quality issues

17
 Online grocery segment saw many exists between 2015-2020

2015-20 : EXITS OF MANY ONLINE GROCERS

While 2015-2020 saw explosive growth, it also witnessed many exits in

Online grocery segment:
• Peppertap
• LocalBanya
• Grocshop
• Movincart
• GetNow
• Aagar
• Nearby
• Zopnow
18
19
 Big Basket has been growing significantly while managed to reduce
their losses from 25% in FY 2019 to 16% of Sales in FY 2020

BIG BASKET : OVERVIEW

Source: https://entrackr.com/2021/02/bigbaskets-b2b-arm-crosses-rs-3800-cr-in-revenue-
during-fy20-posts-rs-611-cr
loss/#:~:text=BigBasket%20has%20stood%20out%20as,March%202020%2C%20regulatory%2
0filings%20show.
20
 BIG BASKET : OVERVIEW

• Second largest player in the online grocery segment and operates

in 30 cities.

• Delivered 20 mn orders per month (January 2021)

• Follow Inventory model

• Tata Group acquired majority stake (64%) in May 2021 at a

valuation of $ 2 billion.

21
 IMPACT OF COVID

• Bigbasket' lost 80 percent of its workforce within two days of the

nationwide lockdown in March 2020
• But the orders kept pouring in.
• Hired 12,300 people in the next 16 days to manage the crisis.

Source: https://yourstory.com/2020/11/big-basket-workforce-covid-lockdown-rebounded

22
 IMPACT OF COVID

• During the pandemic, Big Basket has seen tremendous growth

 Number of new customers - 84%
 Average Customer Visits – 55%
 Indulgence categories ( chocolates, noodles, namkeens ) – 50 to 140%
 Soda and Cocktail Mixes – 125%
 Colours and crayons - 354%
 Gardening Tools - 100%.

Source: https://www.livemint.com/companies/news/bigbasket-sees-sharp-
spike-in-new-customers-due-to-covid-11598961617898.html

23
 BIG BASKET : ANALYSIS OF BUSINESS SEGMENTS

• BigBasket acquired three ventures- RainCan , Morning Cart and Kwik24.

• RainCan and Morning Cart were micro-delivery start-ups. Rebranded as

BBDaily

• Kwik24 was an instant vending machine. Rebranded as BB Instant

• Bigbasket has another segment - BB Beauty Store.

• Big Basket has 4 segments – Big Basket, BB Daily, BB Instant and Beauty Store.

24
 BB Daily has helped Big Basket to increase customer touchpoints
and capture the small ticket size grocery demand.

BB DAILY
• On BB Daily, one can subscribe for milk, fruits and vegetables, flowers, bread,
dairy, eggs, breakfast cereals, tender coconut, etc
 Frequency can be – Daily, Alternate day, Every 3 days, Weekly, Monthly
• No need to place order on a daily basis.
• Subscription quantity can be modified anytime.
• Delivery happens between 5 am and 7 am.
• Has seen a growth of 139% in 2020

Source: https://www.financialexpress.com/industry/sme/pandemic-
bigbasket-records-84-jump-in-new-customers/2072206/

25
 BB Instant help Big Basket to capture instant demand.

BB INSTANT
• Unmanned vending machines that target
corporate offices, tech parks, and apartment
buildings in Tier I cities.
• Each machine carries about 50 -75 SKUs.
• Had 350 machines installed in 2019
• Plan to increase to 3000 machines in the near
term.

Source: https://yourstory.com/2019/06/startup-bigbasket-
online-grocery-hari-menon-plans-2020
26
 BB BEAUTY STORE

• Launched in 2019.
• Wider variety of beauty produces than in Supermarkets
• Competes with Nykaa in this segment
• Currently contributes very less but the target is to get 10% of overall sales
from the beauty segment

Source: https://yourstory.com/2019/06/startup-bigbasket-online-grocery-hari-menon-
plans-2020

27
 PRIVATE LABELS

• Focus on Private Labels as it provide for higher margins and increase

customer loyalty.

• Has launched private labels in variety of Food and Grocery categories.

• Private Labels contribute to about 38 percent of company’s revenues

Source: https://www.business-standard.com/article/companies/bigbasket-bets-on-in-
house-segments-plans-to-expand-private-label-cart-
120081901385_1.html#:~:text=At%20present%2C%20around%2038%20per,labels%20like
%20an%20FMCG%20brand.
28
 LOYALTY PROGRAMS

• BB Star, launched at a price of Rs 299 for a year

• Free delivery for orders above Rs 600 (not Rs 1,000 as in normal
Bigbasket delivery).
• Members also get special offers, and priority on delivery slots.
• On busy days, slots are reserved for these members.
• Around 30-40 percent of the total consumer base has subscribed to the
loyalty program.

Source: https://yourstory.com/2019/06/startup-bigbasket-online-grocery-hari-
menon-plans-2020
29
 QUICKER DELIVERY THROUGH DARK STORES

• To shorten the delivery time, Big Basket established multiple small

warehouses in the city (Dark Stores) which are fed by the city’s Central
Warehouse.
• Dark Stores have helped BB to:
• reduce the distance travelled to the customers’ location,
• reduce the delivery time and
• improve inventory levels.
• Achieve 2 hour delivery in tier 1 cities

Source:
https://www.exchange4media.com/marketing-news/the-biggest-challenge-is-to-get-the-supply-
chain-rightmarketing-headbigbasket-89507.html
https://entrackr.com/2021/02/bigbaskets-b2b-arm-crosses-rs-3800-cr-in-revenue-during-fy20-
posts-rs-611-cr-
loss/#:~:text=BigBasket%20has%20stood%20out%20as,March%202020%2C%20regulatory%20fi
lings%20show.
30
31
 GROFERS

BAD SHAPE IN 2016

•Grofer’s started with Hyper-Local model

•In 2016, the company was in bad shape – making a loss of Rs. 7.2 crores

every month on a sale of Rs. 4.8 crores.

• It’s delivery costs was high , order size was low and the viability of the

business model was challenged.

Source:
• https://www.financialexpress.com/industry/after-rough-ride-grofers-takes-a-turn-for-
better-as-revenues-touch-rs-11-7-cr/738672/
• https://yourstory.com/2018/04/grofers-got-online-grocery-game-right-won-rs-400-
crore-softbank/
32
 GROFERS TURNAROUND STORY

•In the second half of 2016, the company made the following changes in the business
model:
• Moved from Hyper-Local to Inventory based model.
• Replaced same-day delivery with next day delivery
• Over-hauled its delivery mechanism by replacing two-wheelers with mini-trucks
• Increased the assortment of goods (like General Merchandise)
• Introduced Private Labels
• Launched Grofers’ membership/subscription-based service Smart Bachat Club. It
achieved subscription of 1,50,000 in 90 days of its launch.
• Closed Operations in many cities in 2016 and focused primarily in NCR, Mumbai,
Pune and Bangalore.

Source:
• https://www.financialexpress.com/industry/after-rough-ride-grofers-takes-a-turn-for-
better-as-revenues-touch-rs-11-7-cr/738672/
• https://yourstory.com/2018/04/grofers-got-online-grocery-game-right-won-rs-400-
crore-softbank/
33
 GROFERS TURNAROUND STORY: IMPACT OF THE INITIATIVES

• Order size increased from Rs. 750 in July 2016 to Rs. 1000 in December in
2016 and to Rs. 1800 in March 2020
• Daily orders increased from 13000 to 14000 in 2016 to 35000 to 40000 in
2018 and 80,000 to 90,000 orders in 2020
• 40% of sales from private label brands
• 30% reduction in the delivery costs.
• After stabilizing it’s operations, it has expanded to 27 cities
• Valued at $644 mn as per latest round of funding in 2020.
Source:
• https://www.financialexpress.com/industry/after-rough-ride-grofers-takes-a-turn-for-
better-as-revenues-touch-rs-11-7-cr/738672/
• https://yourstory.com/2018/04/grofers-got-online-grocery-game-right-won-rs-400-
crore-softbank/
• https://www.thehindubusinessline.com/companies/grofers-turns-profitable-ahead-of-
34
year-end-target/article33233636.ece
35
 Jiomart

OVERVIEW

• Comprehensive and ambitious business model which include – B2B, Omni-

Channel in B2C, Inventory and Hyperlocal.
• Aims to connect 20 crore customers to three crore offline stores with their
supply chain network throughout the country.
• JioMart has two ways in which it engages with small retailers.
• First, by being a distributor and supplying products to retailers and
• Second, by utilising the network of Kirana Stores to fulfil orders placed
on JioMart.

36
 KEY OPERATIONAL NUMBERS SO FAR

• Online platform operate in more than 200 cities

• In December 2020, Jiomart reached 5 lacs orders a day
• Jiomart has been highly successful in pushing its private labels to the small
stores
• As of December 2020, close to 37% of Mumbai retailers stock JioMart’s
private label products, whilst only 13% of retailers stock the private label
goods of Amazon and Metro.
• With over 4 million downloads, JioMart enters the top three downloaded
shopping apps list in August 2020 (Flipkart - 8.7 mn, Amazon – 8.3 mn)
• Expansion to several other categories including electronics, fashion,
pharmaceuticals, and healthcare.
• In 2020-21, acquired Netmeds, Urban Ladder Just Dial in e-commerce space
and Future Retail (which is under litigation)

37
 Online Furniture and Handicrafts

38
 Online Furniture expanded 7 times between 2017 to 2020.

ONLINE FURNITURE : SIZE AND GROWTH

https://www.statista.com/statistics/1227727/india-online-furniture-market-size/

39
ONLINE FURNITURE TRENDS

• Higher Variety: Players such as Urban Ladder and Pepperfry display over 0.1

million products on their websites.

• From wall paintings to clocks, coffee tables, sofas and beds, consumers are

ordering a wide range of products online.

• E-retail players have changed the styling pattern of interiors.

• Festive and wedding season typically see high demand for furniture.

40
 Competition from Brick and Mortar Players

• Online furniture players tough competition from brick and mortar stores.

• Several players such as Ikea and US furniture major Ashley have entered the
Indian furniture market.

• Ikea has plans to set up 25 stores and Ashely around 100 stores across the
country.

• The brick-and-mortar category also comprises strong domestic players such

as HomeTown and Godrej Interio.

41
 Pepperfry

42
 Pepperfry had 26% increase in revenues in FY 2020 while its losses
have come down from 88% to 44%.

Source: https://inc42.com/buzz/pepperfry-revenue-grows-26-lower-advertising-
costs-help-trim-loss/

43
 Omnichannel strategy and Private labels helped Pepperfry to
improve it’s performance

OMNI CHANNEL STRATEGY AND INVENTORY MODEL

• Aggressively pursuing omni channel strategy by opening physical stores
which are called as Studio Stores.
• Physical stores offers live experience and helps to connect strongly with
customers.
• Had 67 physical studio studios across 24 Indian cities in December 2020.
• About 35% of Pepperfry’s revenues come from studio stores.
• Follow combination of marketplace and inventory model
• Inventory Model has helped them to launch private labels
• Private labels contribute to 50% of their overall sales
• On similar lines, Urban Ladder also shifted to omni-channel strategy.
Source:
https://inc42.com/buzz/pepperfry-revenue-grows-26-lower-advertising-costs-help-trim-loss/
https://cxoworldwide.com/home-brands-to-contribute-50-of-pepperfrys-1-billion-revenue-by-2021/
44
 LOGISTICS AND RETURNS ARE A MAJOR CHALLENGE

• Logistics, especially return logistics is a major challenge in this segment.

• Most online furniture companies offer easy return policies within 7-15 days.

• Since furniture are bulky, a dedicated logistics team is required to ensure

dismantling and return transportation of the items once delivered.

• Disconnect with the colour or quality perceived by the buyer on the website is

one of the primary reasons for returning furniture items.

• Companies are using 3D technology and putting up high quality images to

ensure minimal colour and quality disconnect.

45
 PEPPERFRY HAS IMPLEMENTED HUB AND SPOKE MODEL

• Pepperfry operates many warehouses and its largest warehouse in Mumbai.

• Follows a hub-and-spoke model in order to cut down on logistics costs.

• The company has its own logistics network of ~400 trucks.

• It has lowered its logistics cost to 8-10% from 20-25%.

46
 Flipkart Vs
Amazon

47
 Amazon has better engagement compared to Flipkart. It gets more
customer visits per month than Flipkart and Myntra put together.

ENGAGEMENT : FLIPKART VS AMAZON (INIDIA)

Flipkart Amazon Myntra
Average Visits 176.93 mn 293.77 mn 36.42 mn
per month
(April 2021)

Average Visit 00.04.44 00.05.15 00.05.01

Duration

Pages per visit 6.11 7.23 6.32

Bounce Rate 49.64% 46.81% 50.68%

Source:https://www.similarweb.com/website/flipkart.com?competitors=amazon.in

48
 Flipkart is the market leader in Smartphone but Amazon is closing the
gap.

SMART PHONE MARKET SHARE

FY 2020 FY 2019

Source: https://www.financialexpress.com/industry/flipkart-corners-nearly-half-
of-online-smartphone-market-in-2020-online-shipments-hit-highest-ever-
share/2222086/
 Flipkart has got huge lead in Fashion due to it’s acquisition of
Myntra and Jabong.

MARKET SHARE: FASHION

Source:
https://www.bloombergquint.com/business/2018/03/23/this-is-why-
amazon-hasnt-beaten-flipkart-in-india-yet#gs.X_Le_mc
50
 Flipkart has been consistently outperforming Amazon in Festive
Season Sale.

MARKET SHARE DURING FESTIVE SALE

Source: https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/amazon-flipkart-
sales-generate-rs-19000-crore-in-6 -days/articleshow/71491146.cms?from=mdr
https://www.business-standard.com/article/companies/amazon-flipkart-and-others-clock-8-3-
billion-in-festive-gross-sales-120112700033_1.html

51
 In FY 2018, Amazon had overtaken Flipkart in terms of GMV but
Flipkart had higher revenues .

OVERALL REVENUE AND GMV

52
ILLUSTRATION: REVENUE AND GMV
Amazon sells 10 shirts at a price of Rs. 1000 each of which 3 shirts were
later returned. Amazon get a commission of 30%. Calculate the GMV
and the Revenue?

• GMV = Rs. 1000 * 10 = Rs. 10000

• Revenue = Rs. 300 * 7 = Rs. 2100

53
 Flipkart and Amazon has almost same market share in India .

OVERALL E-COMMERCE : FLIPKART VS AMAZON (FY 2020)

31.9%

31.2%

Source: https://eurasiantimes.com/a-whooping-7-billion-on-stake-in-india-
as-amazon-takes-on-walmart-owned-flipkart/
54
 AMAZON VS FLIPKART ON OTHER KEY PARAMETERS

Preferred/Better

Amazon Flipkart
Metro and Tier 1 Cities
Tier 2 Cities and below
Customer Segment : Upper Middle Income and Above
Customer Segment : Middle Income and Below

Overall Customer Service

User Interface
Loyalty Program
 Flipkart have utilized its acquisitions well leading to improved digital
payments, logistics, and tech.

M&As: FLIPKART’S KEY ACQUISITIONS

Myntra Ecommerce
Jeeves Consumer Technology
NgPay Fintech
AdiQuity Mobile Tech
NestAway Real Estate
Zinka Logistics Logistics

Cube26 Machine Learning, Enterprise Software

Qikpod Logistics
Mechmocha Mobile Gaming
Appiterate Mobile Tech
FX Mart Fintech

MapMyIndia (Minority Stake) Digital Map Platform

ZAPR Big Data, Digital Media

Tinystep Child Care
Jabong E-Commerce
PhonePe Fintech
eBay India Ecommerce
F1 Info Solutions IT And Mobile Repair
56
 Last mile delivery pose a big challenge for e-tailers in India.

LAST MILE DELIVERY CHALLENGES

• In India, last mile delivery is a big challenge:

• First attempt delivery strike rate is 75% (which is considered to be dismal)

• 10-12% of all shipped items fail to reach the end customer

• Last mile delivery costs is about 45-50% of the overall logistics costs

(compared to 25 to 30% in developed economies)

Source: https://redseer.com/articles/amazon-ihs-program-disrupting-the-last-mile-of-
e-commerce-logistics-in-india/

57
 Amazon has roped in local retailers to improve last mile
delivery.

AMAZON LAST MILE DELIVERY: IHS

•Amazon’s IHS (I Have Space) focus on last mile delivery by involving Kirana

stores

•Packages are delivered by Amazon staff to the kirana stores.

•Kirana stores performs order fulfillment - deliver the package within 2-4 km

distance, act as pick up point and complete the system requirements.

•Paid a fixed rate for delivery.

58
 Almost 35-40% of Amazon’s last mile delivery are delivered by
Kirana stores through IHS.

AMAZON LAST MILE DELIVERY: IHS

• No.of Kirana Stores

enrolled in IHS have

crossed 28,000 in 350

cities by October 2020

Source: https://redseer.com/articles/amazon-ihs-program-disrupting-the-last-
mile-of-e-commerce-logistics-in-india/
https://www.business-standard.com/article/companies/amazon-s-i-have-space-
aids-local-stores-expand-business-amid-pandemic-120102200773_1.html
59
 IHS has benefitted both Amazon and the participating Kirana
Stores.

IHS:IMPACT
KIRANA STORES
AMAZON

• Improvement in Delivery • Additional income with

performance little investment/cost
• Cost Reduction • Increased footfall to the
• Ability to manage demand stores and higher sales
spikes better from the stores
• Prime real estate space near to
the customers.

60
 Amazon through their Amflex program has roped students and
housewives to improve last mile delivery.

AMFLEX
• Any individual can also become Amazon delivery partner through AMFLEX.

• Primarily targeted to rope in students and housewives.

• An Amazon flex delivery partner can earn Rs. 500 per day by working for 4 to

5 hours per day.

• More than 30,000 delivery partners have been enrolled through Amflex

program and

• More than 1 lac people have shown interest to become delivery partners.

61
 Flipkart and Myntra has also roped in Kirana stores to improve
last mile delivery.

FLIPKART AND MYNTRA: LAST MILE DELIVERY

• Flipkart has roped in more than 27000 kirana stores to improve last mile
delivery
• Myntra has roped in more than 12500 kirana stores through
MENSA (Myntra Extended Network for Service Augmentation)
• Myntra delivers more than 70% of it’s customer orders through MENSA.

Source:
https://www.livemint.com/companies/news/flipkart-onboards-27-000-kirana-shops-to-
strengthen-last-mile-delivery-1568026845806.html
https://yourstory.com/herstory/2019/09/women-last-mile-delivery-myntra-mensa/amp
 Snapdeal

63
 SNAPDEAL’S FALL

“The one thing I am very, very clear about right now is that I think we’re going to be No.
1 (in terms of sales) by March 2016. I think we’re going to beat Flipkart by then,” Bahl
said in an interview with The Economic Times. “I’m very confident that whatever their
(Flipkart’s) numbers are, we will be ahead of them by March (2016).”
- Kunal Bansal , CEO Snapdeal in August 2015

• Snapdeal had a peak valuation of $ 6.5 bn in 2015.

•But in April 2017, Softbank which was the largest investor in Snapdeal was trying

to sell the company at a Valuation of $1bn.

What happened to Snapdeal between 2014 and 2017?

64
 SNAPDEAL : 2014-2017

Fund raising and acquisitions

• By investing $627 mn in 2014, Softbank became the largest investor with 33%

stake.

•Other major investors were Nexus – 10%, Kalaari – 8%

• Snapdeal raised cumulatively $1.4 bn between October 2014 and early 2016.

• Those cash reserves were used for customer acquisition (discounts and

advertising)

• Also acquired Freecharge for $450 mn in 2015.

65
 SNAPDEAL : 2014-2017

Softbank’s change of mind

• Despite pumping money, Snapdeal did not see major increase in revenues.

• Softbank began looking at other options and invested $1.4bn in Paytm in 2017.

• Softbank wanted to Sell Snapdeal to Flipkart for $ 1bn and get a stake in Flipkart.

• But the above attempt did not materialize due to differences with other investors.

• In August 2017, Softbank on it’s own invested $2.6bn in Flipkart which they

later sold to Walmart.

66
 After FY 2017, Snapdeal managed a mini-turnaround when
nobody thought it will survive.

SNAP DEAL : MINI-TURNAROUND

FY 2017 FY 2018 FY 2020

Revenue Rs. 1180 crs Rs. 535.9 crs Rs. 916 crs
Profit/Loss -Rs. 5143 crs -Rs. 611 crs -Rs. 274 crs

The company got a new investor Mr. Anand Piramal in July 2019.

Source:
• https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/snapdeals-revenue-
soars-73-losses-drop-by-71-in-fy19/articleshow/70243470.cms?from=mdr
• https://www.businesstoday.in/current/corporate/snapdeal-revenue-rises-marginally-to-
rs-846-crore-in-fy20/story/425991.html

67
 Snapdeal was able to treble their unique buyers between 2018 and
2020.

SNAP DEAL

SELLERS

Added 20,000 sellers in FY

2020 to its already existing

base of 500000 Sellers

Source: https://www.forbesindia.com/article/take-one-big-story-of-the-day/how-
snapdeal-is-turning-around-its-
fortune/64189/1#:~:text=A%20pioneer%20in%20the%20Indian,market%20valuati
on%20of%20%246.5%20billion.
68
 How Snapdeal Turned Around?

• In 2017-18, major investors like Softbank, FIH and eBay wrote off their

investments in Snapdeal.

• Rationalization

 Snapdeal sold off all their non-core assets like Free Charge, US Based

Subsidiary Snapdeal Inc, it’s logistics arm Vulcan express etc

 Implemented aggressive cost reduction in manpower, rentals, advertising etc.

Reduced cost by 77% in just one year between 2017-18.

Source: https://economictimes.indiatimes.com/small- biz/startups/newsbuzz/anand-piramal-invests-in-

snapdeal/articleshow/70346421.cms?utm_source=contentofinterest&utm
https://www.businesstoday.in/current/corporate/snapdeal-revenue-rises-marginally-to-rs-846-crore-in-
fy20/story/425991.html_

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 How Snapdeal Turned Around?

• Focus on Value Commerce – Small Sellers, Tier 2 and 3 towns, Low ticket sized
products:
• Most of the products the company sells have a ticket size of less than Rs. 500
• More than 85 per cent of Snapdeal's orders were shipped to customers
living in Tier 2 and 3 towns
• More than 70% of the revenues come from local brands or unbranded
products.
• Reduced their exposure to high priced but loss-making electronics and
mobile phones category.
• Apparels and Home Décor have become the top 2 categories.

Source: https://economictimes.indiatimes.com/small- biz/startups/newsbuzz/anand-

piramal-invests-in-snapdeal/articleshow/70346421.cms?utm_source=contentofinterest&utm_

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 B2B E-Commerce

71
 Indiamart InterMESH

72
MSME
• MSMEs are the backbone of supplier base for B2B e-commerce
companies.
• MSMEs in India – 65 mn to 75 mn
• Digitalization growing among MSMEs – 20% CAGR

Source: ibef, msme.gov.in

73
INDIAMART
• Registered Suppliers – 6.4 mn
• Paid Suppliers – 0.148 mn
• More than 60% of GST registered MSME in India are registered with
Indiamart

Source: Company documents

74
 IndiaMART - OVERVIEW

• IndiaMART - India’s largest online B2B classifieds with 55% market

share
• Operates a product and price discovery platform, facilitating
interactions between suppliers and buyers.
• Typically, a buyer visits the IndiaMART platform looking for a specific
B2B product.
• In response, IndiaMART provides a list of suppliers to meet the
requirements
• The company has listing of more than 50 categories.

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IndiaMART – Revenue Model
• Access to large number of Suppliers for Buyers and access to large
number of Buyers for Suppliers is the key value offered.
• Does not charge buyers
• Has 2 type of suppliers:
 Unpaid suppliers (6.25 mn )
 Paid Suppliers (0.15 mn)
• Prioritise paying suppliers’ listings, minimum number of RFQs,
thereby generating a higher number of leads for them.
• Value Added Services to Suppliers (CMS, LMS)

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Subscription Packages

Silver Gold Platinum

Monthly Rs. 3500 Rs. 5400 Rs. 7800
Subscription Rate
Minimum 30 60 120
Number of RFQs
per month
Cost/RFQ Rs. 116 Rs. 90 Rs. 65

Note:
1. Supplier listings also will improve with each tier.

Source: Company Documents

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 Network effect playing out for IndiaMART

More Business
Enquiries

Attracts More Attracts More

Buyers Suppliers

More Product and

Service Listings

78
 Due to Network effect, IndiaMART has reduced it’s advertisement
expenditure significantly while maintaining growth.

IndiaMART – Advertising Expenses

Source: Company Documents

79
 B2B : DRIVERS OF PERFORMANCE

• Registered Buyers Growth

• Registered Supplier Growth

• Paid Supplier Growth

• Proportion of Paid Suppliers out of Total Suppliers

• Revenue per Supplier

• Renewal Rate

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 INDIAMART : DRIVERS OF PERFORMANCE

FY 2021
No. of Registered Buyers 113 mn (CAGR 33% between FY 16
and FY 21)
No. of Registered Suppliers 6.5 mn (CAGR 21% between FY 16
and FY 21)
No. of Paid Suppliers 0.15 mn (CAGR 16% between FY 16
and FY 21)
Subscription Renewal Rate 80%
Annual Revenue per Registered Supplier Rs. 1050

Annual Revenue per Paying Supplier Rs. 45000

Total Product Listings 71 mn
Conversion Ratio (Paid 2.3%
Suppliers/Registered Suppliers)

Source: Company Documents

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 Udaan

82
 UDAAN : OVERVIEW

• Founded by former Flipkart employees Sujeet Kumar, Amod Malviya and

Vaibhav Gupta in 2016, is one of the best-funded B2B e-commerce players.
• Revenue increased from Rs. 46 crs in FY 19 to Rs. 978 crs in FY 20 (2000%
growth)
• Udaan has over 3 million users across 900 cities and 25,000 sellers across the
country.
• The company’s valuation has soared to $3.1 billion in January 2021 (IndiaMart’s
Valuation was $2.8 bn in May 2021)

Source: https://www.businessinsider.in/
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 UDAAN : FULL-FLEDGED MARKET PLACE

• Follow the transaction-based model, wherein participants can buy and sell.
• Charges commission on transactions.
• Provide Loan through it’s NBFC licence
• End-to-End services such as logistics and warehousing.
• Risky model with huge investments.
• Also gains first hand insights into who is buying what. (This data is not
available with Indiamart as the transactions happen outside Indiamart website)

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 OTHER PLAYERS IN B2B SPACE

• Moglix : Focus on MRO

• Power2SME: Focus on Raw materials and MRO
• Industry buying : Focus on industrial materials, tools and metals.
• Bizongo: Focus on plastics, chemicals and packaging industry
• mSupply: Focus on construction materials, pipes, machinery, electronic
products, home and interior products.
• Ofbusiness - MRO
• Just Dial
• Amazon and Reliance also have forayed into B2B space in India

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 E-COMMERCE :
EXPECTED FUTURE
TRENDS

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 EXPECTED FUTURE TRENDS

• Consolidation

• Omni –Channel Retailing

•Private Labels

•Emergence of new categories like Service commerce/Social Commerce / Re-

commerce etc

• Distribution Efficiencies

• Reducing the Discounts

•Increase non-COD sales

• Increasing Loyalty
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