E-commerce

For Internal Use Only – Not For External Distribution

 Outlook calls

Parameter 2022-23 2023-24P 2023-24P 2022-23 to 2025-26P

Current Previous Current Current

Online Retail 22-25% 19-24% 19-24% 21-26%

Grocery 35-38% 33-38% 33-38% 33-38%

Electronics 16-19% 15-20% 15-20% 16-21%

Fashion 22-25% 20-25% 20-25% 20-25%

Furniture 24-27% 24-27% 24-27% 27-32%

Jewellery 21-24% 13-18% 13-18% 23-28%

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Online retail in India
Low penetration provides significant room for online retail growth
Online retail penetration to cross 6% in the long term Huge untapped opportunity for growth
(Rs tn.)
2% 6.4%
10 CAGR 21-26%
8.7
8
20-25%
6 22-24%
CAGR 24% 3.7
4 3.1

© 2023 CRISIL Ltd. All rights reserved.

2.5
2 1.1
0
FY18 FY22 FY23E FY24P FY28P

Note: Data in oval shaped blue colored box represents online penetration in India Source: CRISIL Research

Globally, online penetration level significantly higher than India

Online Penetration
25%
26%

23%
19%
20% 18%

17%
14%
14%
11%
11%

2015 2016 2017 2018 2019 2020

4
Low penetrated segments such as F&G and furniture to grow fastest
Penetr
36% ation US China India

33% Food & Grocery (16%) 50% 55% 33%

Revenue growth FY23-FY26 CAGR

Furniture (3%)
30%

© 2023 CRISIL Ltd. All rights reserved.

37% 35% 8%
27%
Jewellery (7%)
24%
Fashion (26%) 4% 10% 1%
21%

Electronics (44%)
18%

15%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 30%

Organized retail penetration in FY23

Note: Number in the bracket represents segment share as of FY23

Source : CRISIL Research

5
 Electronics witnessed higher adoption during pandemic, online buying
behavior to continue
8.8%

Electronics (33%)
Penetration delta between FY19-21

1.8%

© 2023 CRISIL Ltd. All rights reserved.

1.5% Jewellery Fashion (8%)
(5%)
1.2%

0.9%

Furniture (4%)
0.6%
Food & grocery (1%)
0.3%

0%
0.3% 0.6% 0.9% 1.2% 1.5% 1.8% 2.1% 2.4% 2.7% 3.0% 3.3%
Penetration delta between FY21-23
Note: Number in the bracket represents penetration level as of FY23
6
Source : CRISIL Research
 Renewed interest by players in the grocery industry
Segment to grow around three times in the next three years Major players looking to tap opportunity in the segment

(Rs bn) New

Description
1400 entrants
1200-1300
1200 Starquik This is an omni-channel foray by the Tata Group.

1000 Reliance Jio Has started Jiomart to sell groceries online

800 650-700 D-Mart The company is also offering groceries online through DMArt Ready
600 498 Flipkart did a soft launch of online grocery delivery service Supermart
Flipkart
400 in Bengaluru

200 142 There have been reports of the company planning to enter the grocery
Quikr
segment.
0
Received approval to invest around Rs 3,500 crore into food and
2019-20 2022-23E 2023-24P 2025-26P Amazon
grocery business

Source : CRISIL Research

• Online grocery to be resilient in fiscal 2024 despite some slowdown in consumption owing to it being in the non-discretionary
segment
• Segment to grow at 33-38% CAGR between fiscal 2023 and 2026 on account of
– Increasing investments
– Major players increasing their focus as well as new players entering the segment
– Strategies such as quick delivery.

7
 Investor participation remains robust
Top 2 account for majority of the investment pie Grocery finding renewed interest among investors
(Rs bn.) (Rs. bn.)
900 100% Funds dried for Renewed invester interest in F&G
95% 94% 180 F&G as
800 90% 88% 90% 160 Initial investors burnt
84% investment their hands and
700 78% 80% 140
77% period in became
70% 120 F&G cautious
600 64%
60% 100
500
50% 80
400 46% 60
40%
300 40
30%
200 20
20%
0
100 10% 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
0 0%
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Online F&G Online furniture Online jewellery Online pharmacy Online fashion
Investment (Rs bn) Top 2 player's share

Note: The data excludes investment into marketplace

Note: Top two players include Flipkart and Amazon
Source: Industry, CRISIL Research
Source: Industry, CRISIL Research

Grocery players Major Investers

• Apart from grocery funding shown in chart, Amazon and Flipkart have
Alibaba group, Mirae Asset-Naver
already invested in the grocery segment BigBasket
Asia Growth Fund
• After marketplaces, online grocery got highest cumulative investment over Sequoia Capital India, Trifecta
Grofers
past four years, followed by fashion Capital Advisors, Softbank

8
 Trust-building moves, modern offerings to aid online jewellery growth
High gold prices and moderating consumption to restrict growth in
Caratlane growth continued in FY23
short term

(Rs bn) Revenue growth Caratlane

450 400-450
400
FY21 15%
350
300
240-250 FY22 75%
250 212
200
FY23YTD 78%
150
98
100
50
0
2019-20 2022-23E 2023-24P 2025-26P Gold prices to remain elevated in fiscal 2024
Source : CRISIL Research

• High volatility in gold prices to restrict growth in short term

• Online jewellery to see growth with sharper focus on consumer
awareness about quality and safety
– Medium-term momentum to be strong as players reduce consumer
resistance through technological interference
– Rising internet penetration, awareness among customers, modern offerings
to aid growth

• 45-50% of volumes are from Tier-II, Tier-III cities, where getting

jewellery with modern designs is difficult

9
 Intense competition leads to cash burn for players
Net loss margin has reduced over the years
0%
Flipkart Amazon Snapdeal
-10%

-20% -17%
-20%
-30% -25%
-31% -29% -30%
-40% -34% -36%
-41%
-50%
-53%
-60%

-70%

-80% -75%

-90%

-100% -95%
FY19 FY20 FY21 FY22

Source : CRISIL Research

• Players not expected to become profitable in the medium term

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 Thank you

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 All was not hunky-dory during pandemic
Many startups layed off employee during pandemic

Blinkit (previously Grofers)

Citymall

Meesho

Pharmeasy

Source : Industry

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 Players increasingly focusing on omnichannel
Caratlane Currently 95+ stores, plans Offline revenue-60%+
to add 50 stores every year

Launched Jiomart in 2020 to

sell groceries online

Pepperfry Started offline studios where

Currently 60 offline
customers can touch, feel & Offline sales-30%+
stores in 20 cities
experience products

Bought Mumbai-based
hyperlocal delivery company
Grab a Grub Services
Pilot project in Telangana to Kiosks rollout planned
Flipkart Set up first offline store
onboard Kirana stores for in Bengaluru to sell
in Bengaluru in furniture
pushing omnichannel private brands
segment
strategy
Relisting its products on
acquired C-Square Info started listing nearly all its
Amazon through its
Solutions, a company that brands and products across
subsidiary
provides software solutions fashion, grocery and
Shoppersstop.com
for distributors and retailers electronics on Amazon

Amazon 5% stake in Shoppers Stop Stake in 'More' Started “Smart Stores”

concept recently

To launch new ecommerce Acquired Jaypore.com,

Exclusive flagship store on Launched Tathastu or Retail
platform in Gujarat by tying an e-tailer, selling
Amazon after 5% stake 3.0 which is an omnichannel
up with 12 lakh small apparel, home textiles
sale strategy
retailers and accessories online

Reliance Retail Shoppers Stop Future Retail ABFRL

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