E Commerce

E Commerce
E-commerce to reach ~Rs 5.7 trillion by fiscal 2024
The Indian e-commerce industry was estimated at ~Rs 2,550 billion in fiscal 2021. Online retail leads with 75% share while online
online ticketing has 24%. Online deals account for a miniscule share of the industry due to their nasceny in the Indian market. We
have not included online portals (car, job, property and matrimonial) in the overall market size. In the medium term, the industry is
expected to be driven by a growth in e-retail (online retail + online marketplace) as players are offering customer-centric services.
The Indian e-commerce sector - estimated at ~Rs 2,550 billion in fiscal 2021 - has had a phenomenal run apart
from fiscal 2021. The market has managed to attract not only consumers but also investors across the world, and
has grown nearly two times between fiscal 2017 and fiscal 2020 on the back of rising internet penetration,
increasing awareness of online shopping, and lucrative deals and discounts offered by well-established players and
start-ups. Restricted travel on account of pandemic impacted online ticketing growth in fiscal 2021 leading to
degrowth in e-commerce sector in fiscal 2021. However, growth outlook for the industry remains healthy. CRISIL
Research projects the e-commerce industry to reach ~Rs 6 trillion over next three years, logging a CAGR of 30-
35%.
We define the e-commerce industry as one comprising players who sell products or services either through inventory-based or marketplac
e or a hybrid model. We broadly classify the industry into e-retail, online ticketing, and online deals segments. Other niche segments su
ch as online grocery, jewellery and furniture also form part of the overall e-retail segment. In our analysis, we do not include online port
als and cab aggregators. For more details on industry classification, refer 'Industry information >> Industry Structure'
Market size of Indian e-commerce industry
Note: E: Estimated; P: Projected; CAGR: Compound annual growth rate

Source: CRISIL Research
Internet penetration increasing steadily
Note: P: Projected
Internet penetration refers to the share of telecom subscribers who have access to the internet.
Online retail to continue to be on a positive terrain, second wave the only speed breaker
The online retail sector is expected to witness healthy growth in fiscal 2022 on a low base of previous fiscal. Ban
on sale of non-essential for most part of first quarter impacted demand to some extent. However, post that the
sector is poised to grow. Festive season too is expected to bring cheer to the sector. Pandemic has brought a
change in the buying behaviour with more and more people taking online route. Further, players are expected to
focus on customer convenience and their online experience rather than on only discounts. Entry of India's largest
brick and mortar retailer Reliance Retail into the online channel will only intensify competition and benefit the
customer and the industry. CRISIL Research projects online retail to clock 25-30% CAGR between fiscals
2021 and 2024.
Online grocery to increase its share by 10 percentage points in the medium term
In the overall food retail industry, penetration of online food and grocery (F&G) segment stands at a miniscule
~0.7%, indicating significant growth potential in the segment. Eyeing the growth potential, the two largest
marketplaces were making significant strides in the segment. With entry of Reliance into the grocery segment with
Jiomart, the segment is expected to witness further push. CRISIL Research expects the online food and grocery
segment to grow at CAGR of 50-60% over next three years, thus taking its share from 12-14% in overall online
retail in fiscal 2021 to 22-24% in fiscal 2024.
Funding to be focussed in medium to long term
The e-commerce space witnessed aggressive funding in the past from investors. However, of late, the number of
players being funded has declined after the failure of majority of startups such as LocalBaniya, PepperTap and
Shopo. The investors have become cautious and focused their funding, as they eye profitability. Of funding of
over Rs 1,500 billion in the online retail space since fiscal 2017 till the second quarter of fiscal 2022, the top two
players have pocketed around 70% share. Investors have figured out that the top 2-3 players are going to survive
and garner major market share. Over the medium to long term, we expect this trend of focussed funding to
continue.
Online retailing growing at a fast pace; accounts for ~75% of market
Online ticketing accounted for bulk of the e-commerce sector, at 53%, followed by online retail (inventory and
marketplace) at around 46% in fiscal 2018. Restricted travel on account of pandemic significantly impacted online
ticketing growth in fiscal 2021 thus leading to an estimated -21% CAGR over past three years.
Investments by major e-retailers, discounts, advertising, and supply-chain expansion helped demand grow in online
retail during the past three fiscals. The segment grew at ~22% CAGR between fiscal 2018 and fiscal 2021. As a
result, the industry dynamics changed with online retail accounting for near 75% of the industry size (by gross
merchandise value). Online deals are still at a very nascent stage in India, and thus account for a miniscule share.
Share of different segments in e-commerce changing
Note: E-Estimated
Ticketing to witness optical growth, while retailing to continue its growth path in near term
 The second wave of the pandemic has culled demand for travel which will impact ticketing segment. The
segment will witness optical growth of 80-85% in fiscal 2022 on a low base of previous fiscal. However,
growth post pandemic will be driven by airline ticketing, which will continue to enjoy a lion's share in the
segment.
 The online retail sector is expected to witness healthy growth of 27-32% in fiscal 2022 on a low base of
previous fiscal. Ban on sale of non-essential for most part of first quarter will impact demand to some
extent. However, post that the sector is poised to grow. Festive season too is expected to bring cheer to
the sector. Demand is expected to further pick up in medium term and the sector will witness growth
CAGR of 25-30%.
Comparison across segments in e-commerce industry
Note: High/Low private equity and venture capital investment is subject to presence/absence of more than Rs 100 billion of 3-year a
verage funding received in a year.
Ticketing to witness growth in medium term

Jun 30, 2022
Online ticketing segment of the Indian e-commerce industry comprises air, rail, bus, movie and event ticketing along with hotels, cruises
and travel packages that are booked online. CRISIL Research expects the segment to reach Rs 1,950-2,050 billion by fiscal 2024 at
a CAGR of 47-52%. Growth in near term is expected to be optical on a low base of last year.
CRISIL Research defines online ticketing segment as one that enables booking of travel packages, hotels and
cruises and tickets for travel (air, rail and bus), movies and events (sports, concerts, etc.) over the internet. For our
estimation, we have not included captive online ticketing websites of airlines (Jet Airways, IndiGo, SpiceJet, etc.),
movie theatres (PVR Cinemas, Big Cinemas, etc.) and traditional travel agencies, among others.
Ticketing to witness growth in near term in fiscal 2023
Following chart shows the evolution of internet in India.
Travel purchase marked the beginning of e-commerce in India
Source: Industry, CRISIL Research

E-commerce entered India with the advent of online ticketing. The online ticketing segment is estimated at around
Rs 1,700 billion as of fiscal 2020. It is estimated to have grown around three times since fiscal 2015, driven by
rising internet penetration, which eventually spurred bookings for travel and movie tickets. Restricted travel on
account of pandemic impacted growth in fiscal 2021 which resulted in revenue declining by ~65% to reach ~Rs
600 billion.
Restricted travel impacted ticketing industry in fiscal 2021
Note: E - Estimated
The market is dominated by high-volume airline ticketing business, which includes both domestic and international
travel.
Airline ticketing accounts for majority share (fiscal 2021E)

Over next three years (fiscals 2021-2024), CRISIL Research expects the online ticketing industry to grow at 47-
52% CAGR. Growth will be driven by airline ticketing, which will continue to enjoy a lion's share in the segment.
Airline ticketing has a high online penetration at ~54-56% (excluding captives). Of the overall online ticket
bookings, captives are estimated to have ~25% share on account of discount sales announced by carriers on
booking through their websites and mobile apps. Players offer discounts to lure travellers to download their captive
mobile apps and then hope to maintain customer stickiness. Other benefits such as low convenience charges
and flexibility in making travel plans render booking through captive platforms more viable. Also, carriers such
as Air India have frequent-flyer programmes, which necessitate travellers to book through their platforms. On the
international ticket booking front, we see a huge potential, as a significant share of booking is still done through
agents (offline).
Over the next three years, domestic air passenger traffic is expected to grow at a CAGR of 44-46%. The second
wave of the pandemic is projected to impact recovery in fiscal 2022 with passenger traffic seen recovering only to
fiscal 2016-17 levels; Recovery to pre-Covid levels seen in FY2023. The second wave of the pandemic has culled
demand for air travel with travel restricted to emergency, essential and migratory travel only. However, growth
post that will be driven by
i) Lower air penetration compared to other developing nations
ii) Pent up demand due to no/minimal travel in fiscals 2021-2022
iii) Increasing per capita income post economic revival from the pandemic
iv) UDAN scheme connecting unserved and underserved airports.
On a low base, majorly all sectors are expected to witness improvement in revenues in fiscal 2022, however for
discretionary services like hotels and travel packages this sharp recovery is expected to be notional , in the sense
that recovery in absolute terms is still a good 2-3 years away. Thus, a segment which was posed for strong growth
will witness optical growth of 39-41% over the next three years.
However, as segment recovers from Covid impact, deeper penetration of internet among the 25-35-year age
group (India's median age is 27 years) will aid growth in online bookings. Increase in connectivity and penetration
of smartphones are also helping online players, wherein they are able to deliver better content such as more pictures
of hotels and its amenities, and reviews to convert website visits into sales. Furthermore, facilities such as pick-up
and drop and hassle-free payment using wallet/COD option will continue to evolve. These customer-centric
services are likely to attract consumers from not only tier-I cities but also tier-II and -III cities.
Market expected to grow at 27-32% CAGR in medium term
Note: P - Projected
Apart from high growth potential, the online travel packages segment offers higher margins vis-a-vis airline
ticketing that fetches only 0-3%. Most online ticketing companies have increased their focus on the hotel and travel
packages segment. For example, MakeMyTrip, which currently has 37% of business coming from these, plans to
increase the segment's contribution to 70-75% in next three-four years. This is because on the ticketing side, there
are limited players to partner with. In hotel and travel packages, the number of players to partner with is fairly
large. This will help in business diversification for online players.
Restricted travel to impact hotel and travel package segment over medium term
Note: P - Projected
Others includes bookings on bus travel, events, sports, etc.
Consolidation in airline ticketing industry and bus segment to slightly ease pressure on profitability
Two major players in the travel industry have merged with MakeMyTrip taking over 100% of the Ibibo Group.
The merged entity commands a substantial share of the overall travel industry (~60%). The industry now
comprises three major players -- MakeMyTrip, Cleartrip and Yatra. All three have strong promoters backing them
and will be able to fend off any pricing pressure from peers. Therefore, the players are unlikely to involve in a
major price war going ahead, as all have a comfortable market share in the industry. Consolidation is expected to
ease pricing pressure. However, profitability will improve for the airline and bus ticketing segment post fiscal 2022,
and not for the travel packages segment. Low penetration and increased competition in the hotel and travel
packages segment will make the players expend on marketing activities, thus taking a toll on profitability.
Online ticketing companies are facing stiff competition from captive websites of airline companies, which use
aggressive marketing tactics to attract customers. Further, with very thin margins (0-3%) offered by airlines and
rising number of participants in the industry, the players have shifted to the convenience fee model, whereby they
levy an upfront convenience fee for online booking. They also levy cancellation and rescheduling charges to offset
discounts offered. They offer other services such as airport pick-up and drop, hotel booking and many more, to
improve realisation.
With the merger of MakeMytrip, Goibibo and Redbus, the online bus ticketing segment has consolidated. Redbus
is a leading player in the segment with estimated 65-70% market share as of fiscal 2021. Due to the merger, net
revenue margin is expected to increase in the long run, as smaller players will find it difficult to operate in the
segment. Further, as this segment has low penetration, going forward, it is expected to grow at a faster rate post
fiscal 2021, which was impacted due to pandemic.
Paytm, a leader in digital payments, has forayed into hotel booking and movie ticket business. It has also
strengthened its presence in these segments by acquiring Nightstay Travels and Orbgen Technologies. Paytm's
foray is likely to intensify competition in these segments.
Major acquisitions in online ticketing industry
Source: Industry
Operating losses increase in online hotel booking, trend to continue in the medium term
The disruption caused by OYO Rooms' deep discounts has helped the overall industry to increase online
penetration. However, the overall penetration of online hotel bookings is still very low in India at 12-15%. This
presents a big opportunity for online players. Online booking is primarily high during the off-season due to
discounts provided by online ticketing companies. Ticketing companies typically offset losses incurred during the
off-season by increasing the prices .in the peak season. They thus enjoy higher net revenue margin during this
period.
Going forward, profit at the operating level is expected to slightly decline for players in online hotel booking
industry due to stiff competition from OYO Rooms (backed by SoftBank) and Trivago. OYO, which started with
a simple distributor model, has moved on to the exclusive model where all its rooms are OYO branded. It raised
$250 million from SoftBank and is expanding. The companies are expected to focus more on the growth front in
this segment as it is at a nascent stage and hence will incur marketing and promotional expense. This will lead to
increased pressure at the operating level, and profitability is expected to decline in the medium term.
Online tickting is typically a volume driven business model
In the online ticketing space, the companies generally provide a one-stop solution covering services such as
booking of air/bus/rail tickets, and hotel and travel packages.
The margin earned on products such as airline ticketing (both domestic and international) is very thin, not sufficient
to meet operating expenses. Further, discounts offered to attract consumers push the margin down into the red.
Still, airline ticketing continues to contribute to revenue generation majorly. The product registers high volume,
thereby providing high visibility to the companies over the web.
Sub-segment-wise gross margin (fiscal 2021)
Note: Final margin for air ticketing (domestic and international) changes further on account of convenience fees charged.
Source: Industry and CRISIL Research
On the other hand, margin earned on other products such as hotels, packages, movies, events, bus travel and other
ticketing is significantly high, but these products lack volume and face stiff competition. Companies such as OYO
offer GPS-based mobile applications that provide a list of hotels and budget rooms in the vicinity. They are trying
to come up with innovative offerings like air-fare drop protection (provided by Yatra) and cutomised travel
insurance (provided by RedBus). Further, funded by deep-pocketed private equity players and venture capitalists,
such start-ups are providing stiff competition to existing players, and thus impacting their volume.
We believe the online ticketing companies need right mix of product offerings for healthy margins. MakeMyTrip
generated ~60% of its total gross revenue from online air tickets in fiscal 2021. However, at the net revenue level,
it contributed only ~35%. On the other hand, the hotel and travel segment, which contributed ~23% at gross
revenue level, had a higher contribution of ~42% at net revenue level. Similarly, existing players will need to
increase their volume in hotel and travel packages segment.
Travel ticketing to continue to dominate the market
Travel ticketing includes airline ticketing (domestic and international), packages (domestic and international),
railway tickets, bus tickets and hotels. Deep penetration of the online market in these segments will result in travel
ticketing accounting for bulk of the overall online ticketing segment. On the other hand, the non-travel segment,
which includes tickets for movies, events, sports, etc., will not lag behind and will continue to grow going forward
post fiscal 2021. Penetration of online ticketing in other segments such as movie, events and sports (includes
cricket, football, etc.) will continue to increase as disposable income increases and consumers (especially from tier-
I cities) prefer convenience over anything else. Thus, we believe, growth in these segments will continue over the
next three years. Further, lower penetration of online channels in other segments (especially in tier-II and -III
cities) provides significant room for growth, going forward.
Profitability for companies to slightly improve on account of consolidation
The only listed company in this segment, , MakeMyTrip, reported loss at the operating level for fiscal 2021 with
significant drop in revenue. Prior to that significant marketing spend led to operating losses. Increasing
competition in the online hotels segment has forced the company to increase its marketing spend. Its operating
margin stood at ~-21% for fiscal 2021.
Profitability was impacted in fiscal 2021 on account of significant decline in revenue
Note: Operating profit and net revenue is for MakeMyTrip only.
Source: Company reports, CRISIL Research
Post pandemic, we expect the margins to slightly improve at the operating level for ticketing players, driven by
online airline bookings (which constitute ~45% of the overall revenue for the segment) on account of
consolidation in the industry as illustrated earlier. As operational costs do not rise drastically for the players with
increase/decrease in revenue, a rise in sales volume will aid operational profitability. Also, with majority of the
players already on firm footing in the industry, spending on marketing is expected to decline. However, marketing
expense in the hotel and travel packages segment will increase as the companies look to increase their market
penetration and competition grow. Further, the increase in the margins will be partially offset by pricing pressure
in the hotels segment, due to competition from OYO Rooms. But the extent of competition will be limited as all
existing players have strong promoter backing, making it difficult for any company to topple the rivals.
To conclude, CRISIL Research believes the online ticketing space has entered a period of consolidation. We do
not expect any aggressive pricing policy over the next three years. Though companies will improve their operating
metrics, we do not expect them to report substantial profits over the next two-three years.
E-retail to clock CAGR of 23-28% in medium term
Jun 30, 2022
The online retail sector is expected to witness healthy growth in fiscal 2022 on a low base of previous fiscal. Ban on sale of non-essential
for most part of first quarter to impact demand to some extent. However, post that the sector is poised to grow. Pandemic has brought
a change in the buying behaviour with more and more people taking online route. CRISIL Research projects online retail to clock 25-
30% CAGR between fiscals 2021 and 2024.
Online retail to continue on its growth path in medium term
CRISIL Research projects the Indian e-commerce sector to clock 23-28% CAGR between fiscals 2022 and 2025.
Consumption slowdown and ban on sale of non-essentials following second wave impacted demand in the first
quarter of fiscal 2022. We expect demand to bounce back with onset of festive season and the sector to be poised
for growth in the medium term.
Online grocery, which has caught the attention of all major players and has seen significant investment over past
few years, will be fastest-growing segment. Apart from this, continued focus of major players on existing business
segment such as electronics will drive growth. With omni-channel strategy gaining prominence, the e-retail industry
seems set to add to the growth of the overall organised retailing sector rather than pose competition to existing
players.
E-retail growth forecast up to fiscal 2025
Note: E - Estimated; P - Projected; CAGR - Compounded annual growth rate
Our definition of e-retail includes products sold via online retail and online marketplace business models. (For
detailed understanding of the business model of online retail and online marketplaces, refer to industry information
- business model). We have excluded online ticketing and online deals, which do not compete directly with the
traditional brick-and-mortar retail format.
Increasing participation, lucrative offers set pace for whopping growth in e-retail industry
In India, the e-retail industry, comprising both inventory and marketplace models of operations, gained
prominence with the launch of Flipkart.com in 2007. Adding to it, from being a deals website in 2010, Snapdeal
switched to a marketplace model in 2012 and global e-retail giant Amazon commenced its Indian operations in
2013. Moreover, industry was flush with early-stage and venture capital funding that led to growing e-commerce
penetration in different retail product segments. Apart from primary growth drivers such as increasing internet
penetration, higher disposable incomes, and rising urbanisation, factors such as user-friendly interface of portals
offered by players, ease of shopping, increasing awareness, relatively higher pricing discounts (in comparison with
brick-and-mortar stores), and easy delivery and innovation, have propelled growth.
The cash crunch post demonetisation, dealt a big blow to the cash-on-delivery (CoD) business. Slowdown in
funding in fiscal 2017 compounded woes, leading to slower growth in fiscal 2017. Introduction of goods and
services tax (GST), confusion around its implementation and teething troubles in its usage system, impacted sales
in first half of fiscal 2018. However, with frenzy over GST settling and consumer sentiment improving, growth
rebounded and is estimated to have clocked 35% on-year in fiscal 2018.
Investments by major e-retailers, discounts, advertising, and supply-chain expansion helped demand grow in fiscal
2019 too. Festive season saw bumper demand on account of heavy discounts, easy payment options and quick
delivery. Growth was impacted in last two months of fiscal 2019 with changes in government regulations. Thus,
the industry is estimated to have grown ~33% in fiscal 2019.
The Department of Industrial Policy & Promotion’s clarification on foreign direct investment (FDI) policy by e-
retailers restricts equity ownership in sellers; caps percentage procurement for sellers from e-marketplaces; and
puts curbs on marketplaces mandating exclusive partnership with brands or on providing favourable services to a
few vendors. With these policy changes initiated to create a level playing field for all sellers, discounts came down
which resulted in slower growth in fiscal 2020. Thus the industry grew at ~23% in fiscal 2020.
Consumption slowdown following Covid-19 impacted demand in fiscal 2021, with first quarter feeling the burnt
on account of ban on sale of non-essentials. The sector performed well during the festive season with demand
coming in from tier-II and tier-III cities apart from metro and tier-I. With social distancing norms being in place
and fear of spread of infection due to pandemic, people preferred buing online. Thus, where most sectors
witnessed de-growth during the fiscal, online retail is estimated to have witnessed a growth of around 10-12%.
Overall, the industry is estimated to have logged CAGR of ~22% between fiscals 2018 and 2021 to reach ~Rs
1,913 billion.
Sector to continue on its growth path in the medium term
The online retail sector is expected to witness healthy growth in fiscal 2022 on a low base of previous fiscal. Ban
on sale of non-essential for most part of first quarter impacted demand to some extent. We expect demand to
bounce back with onset of festive season. New launches in electronics during festive period and easy financing
options is expected to drive growth. With people leaving their homes after months of lockdown, fashion category
too is expected to witness healthy growth with onset of festive season. Pandemic has brought a change in the
buying behaviour with more and more people taking online route. We expect online retail to grow by 27-32% in
fiscal 2022. Going forward, players are expected to focus on customer convenience and their online experience
rather than on only discounts. Entry of India's largest brick and mortar retailer Reliance Retail into the online
channel will only intensify competition and benefit the customer and the industry. CRISIL Research projects online
retail to clock 25-30% CAGR between fiscals 2022 and 2024.
Funding to be focussed in medium to long term
The e-commerce space witnessed aggressive funding in the past from investors. Investor sentiments were pretty
strong as private equity investors / venture capitalists invested in newer startups through Series A and Series B
funding, to try and identify the next unicorn, similar to Flipkart and Shopclues. The bigger players continued to
receive funding.
However, off late, the number of players being funded has declined after the failure of majority of startups such
as LocalBaniya, PepperTap and Shopo. The investors have become cautious and focused their funding as they eye
profitability. Of funding of over Rs 1,500 billion in the online retail space since fiscal 2017 till the second quarter
of fiscal 2022, the top two players have pocketed around 70% share. Investors have figured out that the top 2-3
players are going to survive and garner major market share. Over the medium to long term, we expect this trend
of focussed funding to continue.
Exclusive launches and offers give competitive edge to several players
Several players have entered exclusive sale arrangements for electronics, smartphones, etc.
 For example, Amazon is the exclusive seller for OnePlus. It also has exclusive selling contracts with ZTE
sub-brand Nubia, Coolpad, BLU, Gionee and LG. In 2017, Mondelez India and Amazon partnered to
sell chocolates and sweets through the online platform in the country.
 Similarly, Flipkart is the exclusive seller for Xiaomi, Lenovo, Alcatel, Panasonic, Honor, LeEco, Huawei
and Motorola's latest range of smartphones.
In 2019 policy, government said marketplaces can't mandate exclusive tie-ups. However, it didn't say anything
about a brand wanting to sell on a particular platform. A brand could still sell on a particular platform as they are
free to adopt their channel and sales strategy. Thus, there were just some tweaks and changes in the agreement
between marketplaces and the brand.
Going forward, we expect such partnerships to be pivotal for increasing market share for these companies.
Furthermore, flash sales organised by players to boost sales, has added to the volume. For instance, Flipkart's Big
Billion Day, Snapdeal's Singles Day / Savings Day, Amazon's Diwali Dhamaka, etc will continue over the medium
term. Companies will target customers from across regions and offer deep discounts, thereby adding millions to
the sales volume. Industry sources estimate that the third quarter of every financial year is likely to account for as
high as 35-40% of the overall annual online retail sales due to flash sales as well as high festive demand.
GST to benefit in long term
With the Goods and Services Tax (GST) being implemented, central sales tax (CST) was abolished. This
eliminated hurdles in inter-state delivery and subsumed the entry tax introduced on e-commerce shipments.
Interactions with industry players indicated that they will now be able to align supply-chain and achieve economies
of scale. One of the players said that for fulfilling an order coming from Nagpur, they used to source the same
from their Mumbai or Pune warehouse as these are in the same state and won't attract CST. However, with the
introduction of GST, they can now source the same from a warehouse in Hyderabad which is much closer to
Nagpur and will provide logistical simplicity. Thus, players are expected to benefit from rationalization of logistics
costs because of flexibility in procurement and seamless movement of goods across states. GST will also likely
drive market share gains for organised players. This will also aid e-commerce, as the tax arbitrage which used to
help unorganised players will be reduced.
Private labels: An emerging trend
Selling on marketplace has generally been about selling products of different sellers and earning commissions.
However, players in this space are now venturing out and having their own private labels. Players bring out private
labels in this space based on the customer's need at an attractive price point, thus filling gaps in product offering.
Flipkart acquired Myntra, that has significant presence of private labels that account for a significant proportion
of its revenue. Flipkart launched “Flipkart Smartbuy”, an umbrella brand offering more than 50 categories.
Following suit, Shopclues introduced its private labels Home Berry (Home & Décor), MEIA (Workwear fashion
for women), Baton (Footwear fashion for men) and Digimate (electronics) last year. Amazon has private labels
known as AmazonBasics (electronics, home utility products etc.), Symbol (clothing), Myx (women’s ethnic wear)
and Solimo (home and kitchen products, utensils etc). Private labels provide higher margin for e-tailers and cheaper
prices to customers. But, with technology, and not retailing being the core competency for e-tailers, these players
may find challenges ahead. Further, penetrating high value categories will be difficult as customers show brand
loyalty in these categories. CRISIL Research believes private labels may show growth in smaller ticket size products.
However, growth in high-value categories will be restricted.
Online-to-offline: New model on the block
This type of model allows customers to buy the online discounts in an offline store as well. Companies are now
shifting their marketing strategies from traditional methods and focusing on various digital channels. The online-
to-offline (O2O) model is where online portals tie up with offline retailers to offer products to customers. The
products are usually perishable and have limited inventory. This model helps buyers find more choices in the area
they live in.
Model

With an app, users can search their options, collect information, make a sound decision and then go to the physical
store for trial and buy. This model helps retailers improve brand positioning and customer loyalty.
There has been an increasing interest in this type of model as Paytm and Reliance Retail have recently joined the
game. Paytm Mall has recently forayed into online-to-offline (O2O) commerce. It catalogs inventories of physical
shops to enable discovery of products online. The company is aiming to boost the business of local shops by
bringing new customers who will be able to discover them on Paytm Mall site.
Reliance has entered e-commerce with the O2O model in online grocery. It has created a marketplace where the
local businesses can connect and market their products. The seller can list their offerings on the marketplace. The
interested customers can check product listings, make inquiries, book orders, and collect orders offline.
Limited penetration gives room for future growth

The overall retail market in India was estimated at around Rs 59 trillion in fiscal 2021. The market is dominated by
unorganized players, with organised retailing accounting for only ~10% in fiscal 2021. Penetration of e-retail in
the overall retail market is significantly low, thereby providing sizable opportunity in the sector.
Online market accounts for about 3% of overall retail market
Players shifting focus to bottom line by:

 Building integrated processes
Players are acquiring, partnering with payment wallets, and providing complimentary product portfolio to
enhance seamless operations. Acquisitions in the e-retail space are across the value chain. Companies have
been acquiring established companies, online deal players and the likes to boost business and improve
profitability (for example, Flipkart’s acquisition of eBay India in April 2017 and Paytm’s acquisition of
Nearby and Little in December 2017 to boost its online-to-offline business model)
 Using data-analytics to customise offers
Companies are using high-end data analytics to provide discounts. When compared with past trends,
discounts in the space have definitely reduced, and companies have adopted a customised discounting
mechanism. Companies use the buying history of consumers, gap between two purchases, last purchase
data and the likes, and accordingly make customised offers to ensure consumers stick to the portal. To
illustrate, Amazon has Amazon Prime membership -- using data analytics, Amazon extends special
privileges to these members like faster delivery, better deals, and preference in case of limited sales
quantity. Players such as Myntra are using data mining and artificial intelligence to analyse designs and
styles which are popular in the market and then come up with new designs to place in the market.
Omni-channel presence - the new success mantra
Over past few years, competition from e-retailers has surged significantly and has eaten into the revenue of brick-
and-mortar retailers. With sharp growth in sales volumes of e-retailers, brick-and-mortar players have also
increased focus on online sales channels. Companies such as Shoppers Stop, Bombay Dyeing, The Mobile Store,
Trent and Future Retail have launched online platforms to sell products. Though the share of revenue from online
channels has been very small, the focus on these is increasing to combat competition from online counterparts.
These brands are fighting the funding-dependent discounts from e-retailers with more sustainable membership
benefits in the form of added discounts and loyalty points, to get repeat customers.
On the other hand, instead of opening their own online channels, a large number of offline brands are adopting
shop-in-shop model by tying-up with top e-retailers for promoting their brands online or even for keeping a
dedicated brand page on the e-retailers’ website. This serves the dual purpose of increasing presence while not
incurring added investments in technology and logistics.
Online players too are focusing on expanding in the offline segment. The table below shows the actions taken by
both online & offline player to grow their omni-channel presence. Players have been eyeing especially the food &
grocery segment as the same is largely untapped.
Hence, considering that both online and offline models have their respective benefits, CRISIL Research believes
that more brick-and-mortar players will adopt and strengthen their omni-channel presence and vice-versa, to make
their brand names stronger.
Players focusing on omnichannel

Together, brick-and-mortar and online strategy complement each other
Grocery to grow fastest among e-commerce segments in the medium term
Jun 30, 2022
Apparel and consumer electronics form majority of the e-tail pie. Going forward, while apparel and electronics are expected to form the
major proportion, grocery is expected to grow at a much faster pace and increase its share in the pie.
Fashion and consumer electronics form majority of the e-tail pie
Apparel and consumer electronics are segments that found a foothold in the e-commerce space very early and
have been growing continuously. They form the bulk of the e-tail’s pie.
Share of various segments in e-tail (FY22E)

Going forward, while apparel and electronics are expected to form the major proportion, grocery is expected to
grow at a much faster pace and increase its share in the overall pie.
Share of various segments in e-tail ( FY25P)
Note: P - Projected
Consumer electronics constitutes 45-50% of e-tail
Consumer electronics considered for e-tailing comprises mobiles and accessories, personal computers, household
appliances and small electronics. The segment forms 45-50% of e-tail pie. Of the overall consumer electronics e-
tail sales, over three-fourth is accounted by mobile phones. Wider choices, competitive pricing, easy delivery owing
to small size, exclusive online sales by some brands, flash sales, etc., have propelled mobile phone growth on the
online platform. However, even in the online mobile market, the share of relatively low-value products is
significantly higher. Going forward, sales through online platforms will grow at a slower pace compared to the past
three years. Earlier, growth was on account of lower base as well as demand generated by first-time urban users
for lower range mobile phones. Going forward, higher range smartphones will start taking precedence, and thus,
with a shift towards high-value purchases, people would like to see and touch products before buying.
With imposition of lockdown, sale of non-essential services (electronics comes in this category) was restricted for
most part of the first quarter which impacted sales. However, after ban was lifted, there was a pent-up demand for
home electronics with education going online and people remaining at home. With education going online, there
was increased demand for CTVs and smartphones to meet the needs of online classes for children. Electronics
sales is expected to have witnessed healthy growth during the festive season with mobiles leading the segment.
Thus, electronics witnessed a growth of ~15% in fiscal 2021. The first quarter of fiscal 2022 witnessed impact on
sales as sale of non-essential got banned for most part of the quarter. Growth is expected to improve during second
half with onset of festive season.
Although online retailers have increased the range of electronic products offered online, they have found it difficult
to penetrate consumer durables, especially bulky appliances such as refrigerators and washing machines, due to the
logistical challenges and associated costs. However, with the entry of new players in the TV segment and majority
of their sales taking place online, this segment has seen higher share of sales through online platforms. Further,
with social distancing in place and fear of spread of infection, sale of even large appliances saw increased traction
on online channel during Covid. The segment is expected to show healthy growth of 18-23% in the medium term
and form 40-45% of the retail pie.
Apparel to grow on a low base in short term, to improve in medium term
Another segment forming 25-27% of the retail pie is fashion. Over three-fourth of it is accounted by apparel. Low
ticket size, deep discounts, availability of a wider product range, and shopping festivals have led to significant
online sales. The online apparel market gained acceptance despite the widespread apprehension that Indian
shoppers' preference to touch, feel and check fitting of their clothing, may deter from buying apparels online.
The apparel segment is seeing a shift with increasing contribution of women’s wear in the segment. Rising number
of working women, discretionary spends, and awareness of fashion trends have drawn them online. Various players
have also started using technology to boost sales. Player such as Myntra are using data mining and artificial
intelligence to analyse designs and styles that are popular in the market and then come up with new designs.
The segment being discretionary in nature was impacted on account of lockdown and consumption slowdown
following Covid-19 in fiscal 2021. With people restricting their movement outside of their homes, the
segment witness reduced demand. The segment was impacted during first quarter of fiscal 2022 too with lockdown
in place. With people leaving their homes after months of lockdown, fashion category is expected to witness
healthy growth with onset of festive season.
Going forward, variety, fit and convenience will drive the market, rather than only discounts. Over the medium
term, the segment is expected to contribute to 24-26% of the retail pie.
Omnichannel to help furniture grow in the medium term
The growth in online furniture space will be driven by a combination of online as well as offline channels for
players. Over the past few years, players in this space have opened studios in the offline space to improve customer
connect. Going forward, they are expected to foray more into the offline space. However, growth will be restricted
on account of competition from new entrants in the offline segment, like Ikea and Ashley. The industry is estimated
to grow at a CAGR of 18-23% till fiscal 2024. (For more details on furniture and handicrafts segment, refer to Our
view - Online furniture/ handicrafts.)
Quality assurance, increasing awareness and modern offerings to aid jewellery growth
CRISIL Research projects the size of online jewellery market at ~Rs 107 billion in fiscal 2021, with
artificial/fashion jewellery comprising around one-fourth of the market. Players have been able to surpass the
barrier by offering features such as lab certification for authenticity and quality of jewellery, easy return policies
within a specified time frame, easy home trial, pre-sales assistance and customer support, and after-sales service,
resulting in exponential growth in the segment. Rising internet penetration, modern offerings like small ticket items
and awareness among customers would aid growth of the sector. Players in this segment are also adopting
omnichannel strategies to boost growth. The growth was impacted in fiscal 2021 on account of consumption
slowdown following Covid-19 and high gold prices. Further, jewellery being discretionary in nature, witnessed
purchase deferment. Growth is expected to be moderate in fisca 2022 too on account of second wave and high
gold prices. However, post that, it is expected to recover and grow at 33-38% CAGR between fiscal 2021 and
fiscal 2024. (For more details on the jewellery segment, refer to Our view - Online jewellery.)
Pharmacy gaining popularity in Tier 1 cities
The others segment comprises books and music, pharmacy, baby products, etc. Of these, the online pharmacy
segment is at in a nascent stage and is gaining popularity in Tier 1 cities.
Online grocery and pharmacy: Emerging segments
Online grocery
The online grocery is at a nascent stage, but the segment is poised for growth. The segment has seen an increase
in the number of players entering the segment and also increased investor interest. The government has allowed
100% foreign direct investment in online retail. Major players like Big Basket and Grofers are increasing their focus
as well as new players like Flipkart, D-Mart, Quikr and Reliance, among others, have entered the segment. Players
like Amazon have introduced strategies like same day and next day delivery in order to cater to consumer needs
efficiently. In fiscal 2021, with country under lockdown, sale of groceries through online channels picked up. Thus,
where other sectors were hit hard on account of Covid-19, online grocery witnessed healthy growth of ~75% in
fiscal 2021. We expect the online grocery segment to grow around four times over the next three years. (For more
details on the food and grocery segment, refer to Our view - Online grocery.)
Online pharmacy
The online pharmacy segment is at a nascent stage, and is gaining popularity in Tier 1 cities. Netmeds, PharmEasy,
1mg.com, Medlife, Medstar, BookMEDS, mChemist and Medidart are some of the major players in this segment.
The segment has faced flak from regulators in the past, but the scenario is changing now. The government has
started discussions to frame a policy for online sales that will help consumers get access to quality medicine and
also to attract more players to sell online.
Players entering niche segments like grocery and pharmacy
E-tailers continue making huge losses, upscale to survive

Jun 30, 2022
Discounts offered to drive volumes and additional costs make it difficult for players to earn profit at the operating level in the current
scenario, where upscaling is a survival strategy. CRISIL Research believes companies in the online marketplace will continue to make
operating losses over the medium term, despite earning higher margin in unbranded products across categories. This is owing to high
order fulfillment cost, which involves shipping and packaging costs, returns, payment gateway and cash on delivery charges, and
marketing activities.
Discount-led penetration leads to cashburn for e-retailers
Urban working-class consumers in tier 1 cities are increasingly turning to shopping online for products that do not
involve look, touch, and feel. However, we believe it will take time to build the ecosystem for online shopping.
The traditional mindset of Indian customers to touch and feel products, bargain, and their reluctance in sharing
payment details over the internet are some of the factors that still hinder the industry's growth. In this context,
discounts remain a major crowd puller in the e-retail market in tier 2 and tier 3 cities.
However, we believe the discounts offered by players (aimed at generating volume), coupled with additional costs
incurred on logistics, payment gateway, information technology, and customer acquisition leaves little room for
profitability growth at the operating level in the current scenario, where players are trying to upscale.
Though sales have improved, players are still making losses at the net level. Snapdeal losses increased to Rs 2.74
billion in fiscal 2020 from Rs 1.86 billion in fiscal 2019. Amazon's losses increased 3% to Rs 58.5 billion in fiscal
2020. Flipkart losses rose 20% in fiscal 2020 to Rs 19.5 billion.
Losses as a percentage of revenue for Flipkart improved to negative 31% in fiscal 2020 from negative 34% in fiscal
2019. For Amazon too, net loss margin improved to negative 53% as compared with negative 75% in fiscal 2019.
The combined net loss of the three e-tailers, which stood at ~Rs 75 billion in fiscal 2019, increased to ~Rs
80 billion in fiscal 2020.
Going forward, lower discounts, better deals with manufacturers, and changed product mix should help lower loss
margins for companies. However, we believe the industry, which is in a nascent stage, will continue to make losses
over the medium term.
Lower discounts expected going forward
Lower incremental funding and consolidation in the market has led to an overall dip in discounts. Gone are the
days when e-tailers would give over 50% discount on majority of the products. In 2014 and 2015, e-tailers, backed
by heavy funding, burned cash and gave heavy discounts. With reduction in funding, not just discounts but
spending on marketing and discounting, too, shrunk in 2016 and 2017. However, with acquisition of Flipkart by
Walmart in 2018, and major players eyeing market share, discounts went up, especially during the festival season.
But with the regulatory clampdown by the government on the e-commerce sector in 2019, discounts came
down. Players are expected to ensure customer loyalty by providing services such as faster delivery, flexible return
policy, and low delivery charges on subscription model, rather than pushing for discount led penetration.
Further, with large amount of data available, players are targeting particular segments for providing discounts
depending on how they performed over the years. Smartphones, electronics, apparel, and footwear have garnered
major attention from customers and discounts are high on these segments. Home appliances is getting a major
push from the players, as they want people to explore this segment.
Regulatory changes affect discount mechanism; break even a distant dream
Following changes in industry regulations regarding the marketplace by the Department of Industrial Policy and
Promotion in March 2016, product prices could no longer be influenced by online sellers. This backfired with a
decline in volume growth in subsequent years, as customers had little incentives to purchase online.
However, by encouraging sellers to give discounts and increasing expenditure on logistics services and smooth
interface experience, e-tailers took steps to woo consumers while increasing market penetration. To illustrate,
Amazon.in started Amazon Prime to provide preferential customer services at an annual subscription cost. This,
in turn, continues to add to expenditure with weightage shifting from promotional expenses to advertising and
logistics.
With lockdown in place, supply chain has been affected pushing up logistics cost thus margins remained under
pressure in fiscal 2021.
Industry players adjust profitability channels with an eye on higher income...
For a company operating in the online marketplace, profitability (at the gross margin level) depends on the
following factors:
 Commissions, earned as a percentage of the gross merchandise value, typically average 4-5%. However,
in certain high-margin categories such as non-branded electronics and durables, as well as apparels, the
gross margin could be even higher at 12-14% and 25-30%, respectively. Industry participants are altering
their commission fees in different ways to minimise impact on their commission revenue, while still
encouraging seller discounts. Sources suggest that Amazon has been reducing commission charged on the
basis of seller popularity and volumes to encourage higher discounts by sellers on the website. Flipkart,
on the other hand, has varied commission fees on the basis of allied services offered such as faster delivery
and listing preferences in a bid to improve margin.
 Interest earned on amount in the escrow account adds 0-2% to the gross margin (please refer to Industry
Information >> Business Models >> Online Marketplaces for details on the escrow account).
 Listing fee (typically, fixed per year) contributes 0-1% to gross margin. Players have even started
customising listing fees based upon the product category, volumes, variety and listing preferences.
At an aggregate level, the gross margin for companies having over 10,000 transactions per day and a wide-ranging
product catalogue coupled with a large seller database, is usually in the range of 5-10%. Commission contributes
the most. However, start-up firms and companies operating in niche segments report varying commissions
depending upon the nature of the product. For instance, it could be much lower at 2-3% for real jewellery and
grocery, and as high as 10-12% for imitation jewellery and furniture.
….yet, operating expenses continue to rise as competition intensifies
We believe companies in the online marketplace will continue to make operating losses over the medium term,
despite earning higher margin in unbranded products across categories. This will be owing to the high order
fulfillment cost, which involves shipping and packaging costs, returns, payment gateway charges, cash on delivery
charges, and marketing activities (including commission paid out to affiliates).
We believe that players in the space earn healthy margin as a result of commission from sellers, but the discounts
offered, coupled with advertising and logistics costs, will result in higher cost for the e-tailers. In order to turn
profitable and manage economies of scale, companies have started charging shipping cost on orders below a certain
amount. Even in case of returns, shipping fee, reverse shipping fee, collection fee and pick-pack fee, are charged
by few players such as Flipkart, even though commission fee is not charged on any product returned by customers.
Yet, these measures are not sufficient to curb exorbitant operating expenses being incurred by the online players.
Summary of net loss margins of top e-retail players
Source: Company filings, CRISIL Research

Upscaling and segment diversification are core survival strategies
Based on interactions with various industry participants, CRISIL Research believes that profitability is highly
dependent on scale. We estimate that a company enjoying:
 High scale (around 30,000 transactions per day) typically fetches gross margin of 7-10%
 Low scale (around 2,000 transactions per day) typically earns gross margin of 0-3%
Please note, the margin will vary for companies engaged in niche segments or private labels.
Further, it is also seen that profitability at the gross level is highest in the lifestyle segment, while it is the lowest in
sub-segments such as electronics. However, better volumes are generated from products such as mobile phones
and mobile accessories in the electronics sub-segment. Thus, a player needs to have the right mix of both high-
volume, low-margin products and low-volume, high-margin products.
Sub-segment wise gross margin (FY21)

Players focus on weaning customers away from high cost cash-on-delivery payments
Cash-on-delivery (COD) has the highest share of 60-70% among payment options for online retail in India. COD
is prevalent in India and certain other Asian countries. Poor network connectivity, inhibitions about security and
discomfort with online transactions have made online payment less popular. COD has helped overcome these
problems and propelled the growth of online retail in smaller cities where credit card penetration is relatively lower.
However, the cost of COD orders is 2-2.5% of order value or Rs 30-50, whichever is higher, which is a major cost
center for e-commerce companies. The share of digital transactions, which increased significantly post
demonetisation, has now come down from what they used to be in the immediate aftermath of demonetisation.
COD still accounts for over 50-55% of the overall transaction options.
Players are encouraging payment through credit cards, net-banking, debit cards, and e-wallets. Companies have
also tied up with major banks and mobile wallet service providers to offer additional discounts/ cash backs on
online payment (as COD involves higher cost and return rate).
Slowdown in e-retail discounts to impact online deals segment
Jun 30, 2022
The Indian online deals segment grew at a rapid pace in the past on surging e-commerce sales. Steep discounts provided by players to
garner market share also supported revenue of online deal players. However, over the next three years, growth is expected to slow down,
as e-retail players concentrate on being profitable at the net level. Therefore, the discounts provided are expected to drop, thereby affecting
the segment.
In the online deals segment, customers purchase deals online for products such as apparel and electronics, and for
services such as adventure activities, air travel, hotels, restaurants, spas, weekend getaways, among others.
The payment may or may not be made online, and can even be made directly to the vendor. If the payment is
made online, the online deals company has considerable control over customer service, as it usually withholds
payment until the customer has redeemed the deal. However, if the payment is not made online, the level of control
is low. This significantly increases the risk of the customer not returning to the deals website . However, companies
providing deals on hotels and restaurants currently operate on a full payment model, whereby customers make the
payment upfront to the online deals company and redeem the coupon at the vendor's captive site. The model has
gained significant market share . (Please refer to the 'Business models' chapter of online deals in the Industry Information section
for details on payment types.)
The two biggest success factors for an online deals website are:
 Offering high discounts/deals to the customer
 Engaging with the merchant/vendor to provide the service through a deal
Websites such as Nearbuy (part of Groupon), LittleApp and DealsandYou offer discounts on services provided at
hotels, restaurants, movie theaters, etc. The services are primarily provided to customers in tier-1 cities, as service
providers tie up with online deal players for increased visibility and volumes. However, these deals are limited in
number , and consumers need to purchase the deal at a specified price before it expires.
The deals provide a win-win situation for all stakeholders, i.e, customer, online deal player and service
provider. The service provider can boost sales during lean periods, buyers get a product or service at a low price,
and deal players earn a commission. E-commerce players tie up with deal players and offer high discounts to boost
their topline. Also, e-commerce players engage with online deal players to increase traffic to their website. Websites
such as Coupondunia, CashKaro and DesiDime provide coupons for shopping on e-commerce portals such as
Amazon, Flipkart and MakeMyTrip.
Major players in the segment
Number of online deals players to decrease
The number of players in the online deals segment is relatively large at over 100, with Nearbuy, Coupondunia and
CashKaro being the major players.
While the segment comprises over 100 players, not all are doing well. This can be attributed to low differentiation
among players as a majority of them provide only deals. Hence, CRISIL Research expects the industry to
consolidate, as in the case of the acquisition of Nearbuy and Little, which provide online deals on services, by
Paytm. Paytm is expected to benefit from the large pool of merchant partners of the two as well as the customer
base with the acquisitions, thereby boosting its online-to-offline model.
Also, the business model of online deal players is undergoing a shift as the quantum of discounts provided by
online players decline Also, online players have their own offers. Thus, the pure-play business of providing only
deals will not sustain, and players will need to provide differentiated products to be successful. For e.g., CashKaro
provides price comparison, product search and cashback, in addition to regular coupons and offers.
In fact, companies are increasingly focusing on diversifying their deals portfolio as well, and have started offering
more travel services such as air ticketing, weekend getaways, and travel packages, and products such as apparel,
electronics, food and grocery (including vegetables and staples), etc. As the average ticket price for these new
segments is higher, we expect the average ticket size for the segment to grow at a healthy pace over the next few
years.
Meanwhile, food and beverages account for the lion's share of online deals at 35-40%, followed by spa, wellness
and health services at 15-20%.
Share of various categories in online deals (fiscal 2021)
E: Estimated
Online deals segment to grow at a slower pace as compared to past
The online deals segment, comprising a mere 1% share of the e-commerce industry, doubled at ~30% CAGR
since fiscal 2017 to ~Rs 30 billion in fiscal 2020. The steep growth was driven by a surge in revenue for e-retail as
well as online ticketing players (movies and travel packages).
However, after years of accumulated losses, e-retail players are focusing on being profitable at the net level.
Therefore, the quantum of discount is expected to fall going ahead, which will impact online deal players. Also,
with consolidation in the ticketing segment, the steep discounts offered will decline. With decline in revenue in the
online ticketing segment due to pandemic, deals segment also got impacted in fiscal 2021. Growth will be on a low
base in fiscal 2022. Over the next three years, CRISIL Research expects the online deals segment to grow at a
slower 17-22% CAGR. Growth will be driven by players providing online deals on services; favourable
demography and increasing disposable income will support the service industry, in turn helping online deal
players. Also, categories such as healthcare, activities, spa/salon and dining will continue to garner volumes.
Market to grow at 17-22% CAGR over next three years
E: Estimated; P: Projected
Players making net losses; emphasis continues on customer retention
CRISIL Research estimates gross margin to hover at ~20% for players providing deals on services. Globally, the
gross margin of companies is 50-60% as they have higher bargaining power with vendors because of high volume
provided by online deal players.
In the India, the gross margin on beauty treatments, spas and salons is the highest at 25-30%, whereas that on
restaurants is 10-15%. In the products category, branded products have lower margin compared with non-branded
products. However, the margin for players providing deals on online purchases is ~5%, as the average ticket size
is not very high. The number of customers making high value purchases through e-commerce websites is still very
low in India.
Currently, ~15% of the population shopping online use online deals websites to avail discounts. Therefore, the
companies are spending on marketing to generate sales and build a brand. However, consumer stickiness is very
low, as users look for the player providing the highest discount, irrespective of brand and credibility.
Players will have to work on building strong customer relationships to be profitable over the long run. Working in
this direction, CouponDunia started providing cashback on transactions, which players can use to transfer to other
partners' wallet accounts or use for mobile recharge. The users can also use the same for the next transaction,
which helps create customer stickiness. However, providing cash-backs will also lead to additional expense for
players in the short run. Therefore, CRISIL Research does not expect online deal players focused only on providing
discounts on products to be profitable over the next three years.
On the other hand, players providing online deals on services are expected to be profitable over the next three
years on account of higher gross margin and better performance of the underlying industry at the revenue level.
However, any disruption in this segment via the entry of new players may delay the time required for players to
register profitability.
Currently, competition in this segment is lower as compared with the products segment because of the e-
commerce wave in the country. The required investment in IT infrastructure and manpower, though, is
substantially higher for players entering the services segment. Also, the entry of new players may put pressure on
the bottomline of all players due to aggressive discounts offered.
Online grocery to be fastest growing segment over medium term
Jun 30, 2022
CRISIL Research estimates the size of the online grocery segment at ~Rs 250 billion in fiscal 2021. The segment has seen a rise in
the number of players of late, as well as renewed investor interest. Yet the market remains highly under-penetrated. We expect the
segment to grow around four times in the next three years. Growth will largely come from metros and tier-1 cities, where penetration is
still very low. High order volumes, repeat purchases, changing lifestyles, and new strategies explored by players will boost business.
Online grocery shopping catches on after initial setbacks, demonstrating potential amidst challenges
Online grocery shopping is still a nascent concept in India, with local unorganised retailers (kirana stores) still
dominating the market. While online penetration was ~0.6%, even the share of organised retailers was very low at
~4% as of fiscal 2021.
Online shopping is currently concentrated in a few cities like Bengaluru, Mumbai, Thane, Navi Mumbai, Chennai,
and Delhi/NCR, where there is adequate availability of infrastructure (warehouses, cold storage, etc.) and logistics
services. However, with the overall size of the Indian grocery market pegged at ~Rs 39 trillion in fiscal 2021, the
space presents a huge opportunity for e-commerce players.
A major challenge in the segment is the sale of perishable goods such as fruits or vegetables that necessitates
excellent inventory management by players. Further, online grocery portals directly compete with local kirana
stores that have built a loyal customer base over time.
New entrants set foot in the online grocery market
After a series of funding rounds between 2012 and 2015, many online grocery firms ceased operations in 2016.
This was owing to the non-feasibility of the hyperlocal model, which led to companies piling up steep losses.
Peppertap and LocalBanya were among the firms shutting shop in 2016. However, with players having now moved
to an inventory-based model, they are reaping higher margins.
Grofers, for example, has transformed to a 70% inventory model. The company claims to have driven prices more
aggressively and recorded repeat buying on the platform. BigBasket also operates on an inventory-based model,
with a marketplace model in place for small specialty stores business.
The segment has also seen an increase in the entry of new players as well as rising investor interest over past few
years. With entry of Reliance into the grocery segment with Jiomart, the segment is expected to witness further
push. Their online to offline model, where they connect sellers to customers performed very well in the time of
pandemic and saw orders flowing in. It has started serving in 200 cities and is expected to expand its presence
which will lead to improved growth for the segment. Tata has also made big stride in this segment by acquiring
64.3% stake in BigBasket.
New players in the online grocery segment
Source: Industry
Renewed investor interest; major players ink fresh deals
The sector saw major funding deals over past few years as investors tried to tap the huge opportunity in the online
grocery segment. Some of the major deals are outlined below:
 Amazon received regulatory approval in July 2017 for retailing of food products in India. It currently
offers Amazon Now and Amazon Pantry. It is looking to strengthen these two offerings with faster
delivery, and plans to invest Rs 35 billion in grocery.
 Online grocery company BigBasket secured funding of over Rs 55 billion over the past four years. Apart
from the existing investors – UAE-based Abraaj Basket, Bessemer Venture Partners, International
Finance Corp, and Sands Capital, it raised funds from Alibaba Group Holding Ltd
 Grofers raised funds amounting to ~Rs 45 billion over the past four years. Major investors were
Singapore-based parent company Grofers International and Softbank
 Flipkart re-entered the online grocery segment in 2017 after its failure with its grocery arm Nearby . The
company restarted its grocery service Supermart in December 2017. It has also tied up with 27,000
kirana to boost its last mile delivery.
 D-Mart also launched a pilot in 2017 to provide online groceries . D-Mart’s kiosks are located at places
where it does not have outlets, and from where customers can pick up products ordered online. They will
have to pay 3% of the bill or Rs 49, whichever is higher for home delivery
Penetration ~0.6% despite rapid growth
CRISIL Research estimates the size of the online grocery segment at ~Rs 250 billion as of fiscal 2021. The market
has grown ~18 times since fiscal 2016. Though the average ticket size has increased over the years, a majority of
the growth has come from a rise in volumes.The market grew phenomenally on the back of increasing use of
smartphones in the metros, rise in internet penetration, and steep discounts provided by players in the past few
years. The period also witnessed the entry of hyperlocal model-based players, which aided growth from tier-2 and
tier-3 cities as well. Factors such as the increasing population of working women and easy delivery facilities
provided by the players also supported the surge in growth. However, about six major online grocery players
ceased operations in 2016 on account of profitability woes and an inability to secure further funding for operations.
Industry to grow approximately three times by fiscal 2025
CRISIL Research believes the online grocery segment will be one of the fastest growing in the e-commerce
space, reaching around four times its current market size over the next three years. In fiscal 2021, with country in
lockdown through most of the first quarter, sale of groceries through online channels showed significant growth.
Growth normalised once lockdown was lifted, still grocery continued to witness healthy growth. Thus, where other
sectors were hit hard on account of Covid-19, online grocery will witness ~75% growth in fiscal 2021. With second
wave hitting the country majorly in Q1FY22, demand for online grocery further went up. It will continue to show
robust growth in near to medium term. Growth will largely come from metros and tier-1 cities, where penetration
is still very low. High order volumes and repeat purchases are likely to boost business. With the segment witnessing
significant investment, more new players are entering the fray while major players enhance their focus and
finetune strategies (such as next day and same day delivery), which will propel industry growth in the medium term.
Online grocery market to reach Rs 900-1100 billion by fiscal 2025

In the medium term, investments in technology, new strategies adopted by players such as increasing private labels'
share , and B2B food services, would aid the growth of the sector. The entry of new players will also provide
impetus to the growth of the sector. Although the sector is receiving increased investment, the impact will be seen
gradually over the years. Entry of Reliance into the segment will provide a major boost to the segment. Flipkart
has also reentered the segment with "Supermart" and also tied up with kirana stores to boost its last mile delivery.
Over the next three years, we expect the average ticket size to continue to grow at a compounded annual growth
rate (CAGR) of 8-10% on account of high share of revenue from the metros, where there is potential for ticket
sizes to increase. However, the numbers of orders per day is expected to grow at 40-50% CAGR, as the low online
penetration offers vast untapped potential. Further, with residents in metros such as Bengaluru, Mumbai, Delhi,
and Chennai strapped for time, the time saving convenience offered will continue to fuel the shift
to buying groceries online. Thus, we expect online grocery to grow at 50-60% CAGR over the medium term
Profitability
The online groceries segment is a very low-margin business. Players require investments to build robust IT
infrastructure, an efficient supply chain, quality warehousing and storage facilities (for inventory-based players),
and an efficient delivery system. Therefore, it is very difficult for players to record profits at the net level in the
short term due to low margins and high costs. To counter this, companies have been adding products that offer
higher margins, such as value-added dairy products and organic food products.
Also, companies are selling their products through private labels which enable them to offer higher quality
products, fetching higher margins. BigBasket has three of its own private labels- "Fresho" to sell fruits, vegetables
and breads, and two other private labels - "Royal" and "Popular" for staples . Also, Grofers launched its private
label "Freshbury" for fruits and vegetables and "Best Value" for staples in 2016. The company is also adding new
warehouses in Bengaluru, Mumbai, Lucknow and Jaipur. This change in the product mix, coupled with increasing
volumes, will help companies expand their gross margins.
CRISIL Research does not expect players to become profitable even in fiscal 2022, owing to lower utilisation of
warehouses of inventory-based players at new locations. Also, some of the largest players in the segment are
currently profitable only in a few tier-1 cities due to very high capacity utilisation of warehouses, thereby benefiting
from economies of scale.
Emerging trends
Omni-channel to lead way for online food and grocery
Omnichannel provides better customer connect in the US…
Grocery buying through online-only route has seen resilience from customers even in the developed markets such
as the US.
To get around this, the companies there are increasingly adopting the omni-channel route, wherein the offline
channel helps them have a strong supply chain, which was missing in the online-only route.
Customers, too, are increasingly embracing the omni-channel route where they can click and collect products, get
speedy delivery options as well as touch and feel fresh products. Thus, the two channels are no longer perceived
as distinct, but as two sides of the same coin, working to provide customers the best of both worlds and ensuring
a seamless experience.
…and is the model to emulate in India as well

Omni-channel will be crucial in the Indian markets, too, for both online and offline players to stay competitive
and relevant.
Sample the success factors for online F&G retailing: efficient supply chain management, high stock turnover ratio,
better inventory management, economies of scale, higher share of private labels and last-mile delivery.
Many of these are easier to manage if a player has both a physical and online presence. While offline presence helps
provide customers a touch-and-feel experience and an immediate-purchase option, online presence helps in faster
expansion with relatively lower fixed costs. This helps meet the customer demand for a personal shopping
experience while conveniently managing orders online and getting home delivery or collecting the same from a
store as convenient.
Hence, companies which are able to successfully employ a mix of online and offiline strategies over the next few
years will be the biggest gainers.
Start-ups looking at subscription-based models
Online delivery of food and grocery has been a tough nut to crack for most companies owing to low margins, high
cost of delivery, and highly perishable inventory. However, recently, companies are targeting the subscription
model.
Several micro-delivery platforms such as Milkbasket, Dailyninja, MrNeeds, etc., have emerged in different cities
over the past couple of years. Unlike online grocery platforms, a majority of micro-delivery platforms are built
around the premise of milk subscription. These players witness frequent orders and have high customer retention.
Unlike on-demand grocery delivery companies (Bigbakset, Zopnow, etc.), micro-delivery platforms take orders in
the evening and deliver items next morning. However, none of these micro-delivery platforms have multi-city
operations.
BigBasket has currently forayed into the micro-delivery segment with acquisition of milk delivery startups RainCan
and Morning Cart. It has also taken a controlling stake in vending machines startup Kwik24. However,
predictability in items other than milk is a challenge for these firms.
Increasing internet penetration, awareness among customers and modern offerings to aid growth
Jun 30, 2022
Jewellery in India has always been regarded as a commodity with eternal value. With growing internet usage and features like try-at-
home, e-retailing has become an emerging route to sell both expensive and pocket-friendly jewellery in India. Growth to be moderate in
short term on account of second wave and high prices, medium-term growth momentum to continue as players address several points of
customer resistance
When e-retail was a relatively new concept for Indian consumers, the idea of selling/buying jewellery online was
inconceivable as Indians prefer to touch and feel products before buying. However, increasing entrepreneurial
ideas, coupled with improved technology, resulted in strong growth in the space. Today, jewellery (both real and
artificial) is sold online with attractive offers, prices, discounts and designs. Companies have evolved in a short
span of time and have put to use technology to provide utmost satisfaction to customers. Features such as cash-
on-delivery, equated monthly installments, 3D views, dummy size, pre-sales assistance and no-question 30-day
return policy, have helped companies build trust among consumers for even high-value products.
India, which has always remained a large consumer of precious metals, has lately seen changes in fashion trends.
Rising gold prices along with rapidly changing fashions (change in taste, especially due to rising number of working
women) have forced women (major consumers of jewellery) to explore alternatives such as platinum, diamond and
even artificial jewellery.
High-quality assurance at lower price led to development of online jewellery market in India
CRISIL Research estimates the size of online jewellery market at ~Rs 107 billion in fiscal 2021, with
artificial/fashion jewellery comprising around one-fourth of the market. Growth in the market can be attributed
to the entry of two players - BlueStone and CaratLane. Support from venture-capital funding and near-zero market
competition triggered a series of disruptive measures by these firms and resultant milestones in the industry.
Summary of milestones for BlueStone and CaratLane
Source:
Industry, CRISIL Research
Jewellery being a high-value item, the main barrier for e-commerce players was to develop trust in target
consumers, to go ahead with online transactions. Players have been able to surpass the barrier by offering features
such as lab certification for authenticity and quality of jewellery, easy return policies within specified time frames,
easy home trials, pre-sales assistance and customer support, and after-sales service, resulting in exponential growth
in the segment.
Online jewellery sales surged with increased penetration
Note: E-Estimated; P-Projected

Growth to be moderate in short term on account of second wave and high prices, medium-term growth
momentum to continue as players address several points of customer resistance
The online jewellery industry in India has an average transaction size of about Rs 40,000 for precious and Rs 3,000
for fashion/imitation jewellery. High gold prices impacted the segment's growth during fiscal 2019 and fiscal 2020.
Thus, it grew 35-37% in fiscal 2019 and 2020 as compared to a 48% growth in fiscal 2018. High gold prices and
consumption slowdown due to pandemic impacted demand in fiscal 2021 leading to ~10% revenue growth.
CRISIL Research expects growth to be moderate in fiscal 2022 on account of second wave. Lockdown during the
first quarter where there has been ban on sale of non-essentials for the most part will be hit most. This will also
impact full year revenue too. However, post fiscal 2022 the sector will witness healthy growth to reach Rs 250-
285 billion revenue in fiscal 2024. The exponential growth will be a result of several emerging factors in the
industry:
 Variety and price point – Access to a variety of designs for different occasions and of different ethnicity,
coupled with easy comparability between prices across websites has increased customer confidence and
led to preference for online jewellery purchases
 Quality - Assurance of quality products and high purity in addition to transparent and customer-friendly
policies have led to the segment's growth
 Penetration – Demand for artificial jewellery from Tier 2 and Tier 3 cities has been increasing
consistently as people in these cities generally draw inspiration from trends prevailing in Tier I cities. In
fact, 45-50% of the sales volume is estimated to be generated from these cities
 Awareness - Deeper penetration of the internet, increasing awareness about availability of real and artificial
jewellery online, and mounting awareness about authenticity of the products have reduced resistance and
made it easier for new players to reach the market
 Convenience - Improved product and service offerings from players with easy return policies, home-try
options and provision for customisation make it lucrative for customers to try the online option
 Small ticket-size items - Players mostly see demand for smaller ticket-size ornaments like rings. They are
coming up with new, modern and light-weight designs to attract customers.
Players adopt omni-channel presence for growth
BlueStone and CaratLane are primarily retail-based sellers who have set up end-to-end processes from
manufacturing to delivery. CaratLane has associations with global vendors only for procurement of solitaires.
Other industry participants like VelvetCase and WearYourShine (owned by PC Jeweller), which started operations
in 2012 and 2014, respectively, have adopted the market-place model -- procuring products from small jewellers
and providing logistics and front-end sales support. VelvetCase has more than 300 offline vendors providing
designs and finished products, while WearYourShine has showcased more than 40 brands on its
website. Bluestone, too, currently has more than sixteen physical stores.
Both inventory-based and market-place models have their pros and cons and are expected to grow simultaneously.
In 2016 itself, there have been new entrants in both the models. Melorra, launched in 2016, has an inventory-based
model for real jewellery with an in-house design team. However, supply chain and delivery have been outsourced
by the company. JewelEmart, also launched in 2016, on the other hand, provides a platform to jewellery
manufacturers to showcase their products in a revenue-sharing model. Ornaz, launched again in 2016, focuses on
a niche segment as it offers diamonds and engagement rings of the highest quality at affordable prices . Most
industry participants do not have a manufacturing unit set up; they function with an in-house design team and
third-party manufacturing model, to reduce both inventory and fixed set-up costs.
Operating models of online jewellers
Note: Companies in 'red' sell imitations, others sell real jewellery.
Considering the high value of jewellery, the customers' need to touch and feel it cannot be completely replaced by
multiple trial and return options. Additionally, physical presence also aids in building customer trust. Considering
benefits of both online and offline presence for growth, players are adopting omni-presence strategy for growth.
While CaratLane has over 123 operating retail stores across the country, several established jewellers like Tanishq,
TBZ and Kalyan have tie-ups with Flipkart and Amazon to sell their products online. Recently, Kalyan Jewellers
acquired online jewellery firm Candere.com to augment its presence in the online jewellery segment.
Companies expanding into omni channel experience
Interactions with industry participants indicate that online jewellery operations are similar to online insurance
selling, where pre-sales conversations are held with customers. Customers in the online jewellery segment too
require consultancy services before purchase, which are offered via live chat, mail or phone. Players also send
replicas for verification of size.
Majority of web portal traffic is initially directed at browsing through designs. Transition from browsing to
shopping remains vital for players. To ensure high conversion, players offer a highly adaptive website, which
provides rich promotions and critical information in the form of side bars, without impacting the user experience.
Further, to overcome limitations of the web channel, companies provide opportunities to touch and feel jewellery
through small stores/kiosks. Also, try-at-home features have been introduced by jewellers which helps them build
trust among customers.
Profitability better compared to offline retailers
Online jewellery retailers enjoy better profitability than players running physical format stores, who have to pay
high rental costs. Moreover, online retailers can afford to maintain limited inventory because of 'just-in-time'
delivery practices followed by them. Hence, their need for working capital is lower than that for traditional retailers
and is estimated to be 30-60 days.
Online retailers, upon receiving an order, source jewellery from vendors or manufacture them in-house. This allows
them to exclude middlemen in the delivery chain. As a result, these players can offer lower prices, while earning
higher margins than the regular physical-format jewellery retailers. Online jewellery retailers typically earn 12-17%
operating margins compared with 8-10% earned by physical format jewellery retailers. While margins are lower at
12-14% in case of real jewellery due to high service costs, margins in imitations are higher at 15-20% due to design-
based cost and lower service cost (players do not have to provide try-at-home and customisation options for low-
value imitations).
Omni channel model offer ample opportunities
In India, the online jewellery road has been long and slow. Several companies raised funding in the interim, such
as CaratLane and BlueStone (backed by Accel Partners), while several have gone bust in the fast-paced e-commerce
space (such as KuberBox). The online jewellery segment accounts for a miniscule share (~4%) of the overall Rs
2.8 trillion jewellery market in India. This underscores a huge opportunity for players to grow as internet
penetration and disposable income increase.
Omni-channels to help online furniture and handicrafts industry grow
Jun 30, 2022
In the past, online furniture and handicrafts segments struggled to stay afloat, owing to low customer interest. In fact, several players
shut shop. Going forward, omni-channel strategy is expected to help the segment grow.
Omni-channel strategy to help players grow revenue
E-retailers in India sell almost everything across varied price points. However, the concept of buying furniture or
handicrafts online has remained off the radar of Indian customers. The traditional way of shopping by inspecting
the material, look and feel, size, colour, and shape has been the norm in this category. However, this changed in
2012 with the launch of online furniture players such as Urban Ladder, Pepperfry and FabFurnish. Customers can
now buy furniture and handicrafts at the click of a button. Improving logistics services have helped such players
expand rapidly.
When it comes to the handicrafts market, India offers a range of handicrafts from each of its 29 states. Some of
the major centres for handicrafts in India include Moradabad (also known as Peetalnagari, i.e. city of brass, for its
brass handicrafts), Saharanpur (wood products), Firozabad (glass products), Jaipur (Jaipuri quilts, printed textiles,
wood, and iron furniture), and Narsapur (lace and lace goods).
However, easy availability of regional artifacts has remained a challenge across India. This gap has been bridged
by the emergence of players such as Craftsvilla in 2011.
Overall, the online furniture and handicraft industry is still at a nascent stage, with industry leaders having a short
track record of just over five years.
Demand to improve on a low base in short term, growth inctact in medium term
CRISIL Research estimates the Indian furniture and handicrafts market at ~Rs 1.3.trillion in fiscal 2021. Within
this space, we peg the size of the online furniture and handicrafts segments at ~Rs 65 billion.
With imposition of lockdown due to second wave, sale of non-essential services (furniture comes in this category)
has been restricted for most part of the first quarter which will impact sales. The segment is expected to witness
growth post that in the short term, albeit on a low base of last year.
The industry is projected to grow at 18-23% compound annual growth rate (CAGR) till fiscal 2024. However, the
growth will be driven by a combination of online as well as offline channels. Over the past few years, players in
this space have opened studios in the offline space to improve customer connect. Going forward, they are expected
to foray more into the offline space.
Competition from new entrants in brick-and-mortar segment to restrict further growth

Several players such as Ikea and furniture major Ashley from the United States have entered the Indian furniture
market. Looking at the rapid growth of the retail sector, Ikea, which had planned to invest Rs 105 billion to set up
25 stores across the country, is going to step up investment. It now plans to open 40 stores. However, it has not
given a definite timeline for the same. Ashley also recently set up a store in India, with an aim to increase the count
to 100 stores. The brick-and-mortar category also comprises domestic players such as HomeTown and Godrej
Interio. This has increased competition for players in the online segment, as customers prefer the touch-and-feel
aspect before purchasing furniture.
Tier I demand forms backbone of online furniture industry…
More than 80% of the online furniture demand is from Tier I cities, as top industry players have a presence in over
20 of them. Limited space along with the need to accommodate household essentials has made online furnishing
websites popular in cities. Players such as Urban Ladder and Pepperfry have tie-ups with several suppliers, and
display over 0.1 million products on their websites. They offer a wide variety of designs and colours, which are
generally not available in the brick-and-mortar setup owing to limitations of physical display.
CRISIL Research believes the mushrooming of e-retail players in the furniture and handicrafts space has changed
the styling pattern of interiors. The festive season and wedding season typically see high demand for furniture and
handicrafts. From wall paintings to clocks, coffee tables, sofas and beds, consumers are ordering a wide range of
products online.
…While handicrafts gains maximum from Tier II cities
The handicrafts industry, with its average transaction size of under Rs 1,000, has high demand in Tier II cities
where options are limited and shoppers find it convenient yet ‘less risky’ to buy online. In Tier I cities, limited
demand for handicrafts has restricted market penetration to under 25%.
Players adopting omni-channel strategy in furniture segment
Although the biggest advantage the online furniture industry has is the lack of a requirement for physical space for
display, players such as Pepperfry and Urban Ladder have taken the offline route to increase their connect with
customers. They have been investing heavily on offline expansion to boost sales and attract new customers. With
67 studios across cities, Pepperfry showcases a few products and helps customers better visualise designs. In fact,
over 30% of the company’s sales is estimated to come from these studios. Reliance Retail recently bought 96%
stake in another major player in the online furniture industry, UrbanLadder.
Logistics cost is the major hurdle in the industry’s growth, and players are evolving new ways to optimally utilise
their logistics facilities. With Pepperfry increasing its presence in offline retail, the omni-channel model is likely to
see growth in the coming year. Pepperfry is looking to double its logistics footprint in 1,000+ cities and towns to
establish a strong delivery network in Tier III and IV cities. Online handicrafts firms are also venturing into omni-
channel model by opening offline stores.
Return logistics cost pose major hurdle
One of the prominent underlying factors for the acceptance for e-commerce as a channel for making purchases is
easy return policies of 7-15 days. Like the consumer durables industry, where sales of refrigerators and larger items
are lower due to their bulky nature and logistical hassles, the online furniture players face the same challenges. For
furniture items, which are generally bulky and consume a lot of space, a dedicated logistics team is required
to ensure the dismantling and return transportation of the delivered items.
Disconnect with the colour or quality as perceived by the buyer on the website is one of the primary reasons for
returning furniture items. Hence, companies are using 3D technology and putting up high quality images
to ensure minimal colour and quality disconnect. Further, heavy discounts are given on products with a no-return
policy.
Pepperfry has built its largest warehouse in Mumbai and follows a hub-and-spoke model to cut logistics costs. The
company has its own logistics network of ~400 trucks. It has now lowered its logistics cost to 8-10% of the cost
of goods sold from 20-25% initially.
Profitability
Majority of the players in the online furniture and handicrafts segments operate on a marketplace model, where
they do not hold inventory. Thus, the inventory holding risk is negligible. Further, by operating from online
platforms or through mobile applications, companies do not incur lease rentals. This helps them earn high gross
margins. Industry interactions revealed companies in the segments typically earn gross margins of up to 30-50%
for non-branded products, whereas branded products (which offer low margin) complete the product portfolio.
However, the companies invest significantly in IT infrastructure and logistics and assembly services. As these
services are offered free of cost to customers to build trust and attract volume, companies in the online furniture
and handicrafts space such as Pepperfry and Urban Ladder are not yet profitable. The offline foray has helped
players minimise losses, as advertising expenses reduce.
Pepperfry reported revenue of Rs 2.6 billion for fiscal 2020 with losses of Rs 1.2 billion. Losses were lower by 33%
on-year during the year as it cut down on its expenses.
CRISIL Research believes over 2-3 years, companies in the online furniture and handicrafts space will look to
establish an offline channel to boost sales. Players would focus on branded marketing to attract customers on the
basis of quality assurance. Players earn more margins on their house brands by adding value in terms of
standardised packaging, quality control and easier logistics.

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E Commerce

E-commerce to reach ~Rs 5.7 trillion by fiscal 2024

Note: E: Estimated; P: Projected; CAGR: Compound annual growth rate

Ticketing to witness growth in medium term

Source: Industry, CRISIL Research

Source: CRISIL Research

Source: CRISIL Research

Limited penetration gives room for future growth

Players shifting focus to bottom line by:

Source: CRISIL Research

Source: Industry, CRISIL Research

Players entering niche segments like grocery and pharmacy

Source: Industry, CRISIL Research

E-tailers continue making huge losses, upscale to survive

Source: Company filings, CRISIL Research

Source: Industry, CRISIL Research

New players in the online grocery segment

Source: CRISIL Research

…and is the model to emulate in India as well

Note: E-Estimated; P-Projected

Competition from new entrants in brick-and-mortar segment to restrict further growth

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