How will New Channels in the Ecommerce Space Expand the Sector?

Last year, India created 11 new unicorns, surpassing the $1 billion club in valuation. This list includes Zerodha, Unacademy, Postman, Pine Labs, FirstCry, Nykaa, Razorpay, Car24, Zenoti, Dailyhunt, and Glance.


A few years back, thinking of starting a business of own was considered a risky affair. Quitting a 9-to-5, double digit salaried job and starting a business of own was surely considered as one of the ‘stupid’ decisions in once career. But then things changed after the grand success of these modern-day mavericks like Jeff Bezos, Travis Kalanick, Sachin Bansal, Binny Bansal, Jack Ma, Bhavish Aggarwal, Ritesh Agarwal and many more to name. Surely if they would have thought in the same manner and hesitated on the decision to expand business, then the current scenario would have been different. They have already created a milestone in the startup ecosystem. Thank god, they did things other way round!  

Taking a clue from their success, the word entrepreneur is thrown around a lot now a days. With many people seeing it as a means to enjoy a whole new level of professional, financial and personal freedom. Having the ability do what you love, when you want and on your own terms is certainly attractive, especially when you could potentially build it into a sizeable income. 

With favourable government policies and other supported factors, India has become a hotbed for most of the e-commerce startups. Even biggies like Jeff Bezos consider that India has the mettle to take this e-commerce game to a grand level. In his last India’s visit, he predicted that the 21st century is going to belong to the world’s largest democracy- India. The country is one of the largest and rapidly growing markets for online shopping. Even though Amazon has been leading in the game, Indian companies, especially pure e-commerce players, are holding their ground and fighting to expand business in this fast-growth market.

The Indian internet and e-commerce landscape already counts hundreds of millions of users but it is still far to take the lead. Much of the growth for the industry has been triggered by an increase in internet and smartphone penetration. The people are accessing the internet and are shopping online for a growing array of goods and services. As of August 2020, the number of internet connections in the country significantly surged to 760 million, mostly driven by the ‘Digital India’ programme. Out of the total internet connections, 61 per cent connections were in urban areas, of which 97 per cent connections were wireless.

Even though India is still a low-income country, the people are swiftly getting used to e-commerce and its convenience. E-commerce has transformed the way business is done in India. The Indian e-commerce market is expected to grow to $200 billion by 2026 from $38.5 billion as of 2017. Since the Indian market is still technologically under the development, there is much room for entrepreneurs to expand business.

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A total of 40 companies that are located outside India have at least one founder having an Indian origin.

However, competition is already very aggressive, as many local and global players are fighting to grab a slice of this fastest developing market. With the historic success in the United States and other developed countries, Amazon has been able to lead the way in India too. But local players, especially Flipkart, which was acquired by Walmart in 2018, have managed to expand business and become tough competitors in this promising market. With the size of the Indian market, many other local companies are still reaching a large audience even though they only take a small share of the market. Most of them are pure e-commerce players who have made it by dominating a specific category of products, such as BookMyShow and IndiaMart.

The 2020 Unicorns List

In 2013, when Cowboy Ventures Founder, Aileen Lee coined the term unicorn to refer to technology startups with valuations over $1 billion, there were 39 unicorns in the United States and India had none. But now India is home to many unicorns.

Last year, India created 11 new unicorns, surpassing the $1 billion club in valuation. This list includes Zerodha, Unacademy, Postman, Pine Labs, FirstCry, Nykaa, Razorpay, Car24, Zenoti, Dailyhunt, and Glance. Zerodha became the fastest startup to expand business and achieve the Unicorn status. The fintech company took 10 years to cross the $1 billion valuation. The Vijay Shekhar Sharma-founded Paytm alone claims nearly 22 per cent of the total valuation share of these unicorns. Globally ranked 13th in the list, Paytm is the most valued Indian start-up.

Along with being the highest valued Indian unicorn, fintech company Paytm is also the highest gainer in the Indian unicorn category. Over a year’s period, the company has managed to increase its valuation by a whooping $6 billion. Similarly, there are 61 global Unicorn companies, which have Indian origin founders. Interestingly, a total of 40 companies that are located outside India have at least one founder having an Indian origin.

The top 10 ecommerce sites in India are Amazon India with an audience reach of 89 per cent. Flipkart captures the second position with 242.62 million monthly visitors. On the other hand, Alibaba and Snapdeal have 175.95 million globally and 56.41 million monthly presence, respectively. Myntra has 48.03 million monthly visitors and IndiaMart has 47.23 million monthly visitors. Similarly, BookMyShow, Nykaa, FirstCry, Img have 43.25 million, 20.84 million, 16.94 million and 14.62 million monthly visitors, respectively. Electronics and apparel make up nearly 70 per cent of the e-commerce market, when evaluated against transaction value. Other upcoming categories, where entrepreneurs are expected to expand business, are baby products, furnishing, personal care, food and groceries.

The Road Ahead

The e-commerce industry has been directly impacting micro, small and medium enterprises in India by providing means of financing, technology and training to expand business. It has proved a favourable cascading effect on other industries as well. The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest e-commerce market in the world by 2034. 

Technology-enabled innovations like digital payments, hyper-local logistics, analytics driven customer engagement and digital advertisements will support the growth in the sector. The growth in the e-commerce sector will also boost employment, increase revenues from export, increase tax collection by ex-chequers, and provide better products and services to customers in the long-term. Rise in smartphone usage is also expected to rise by 84 per cent to reach 859 million by 2022.

In order to tap onto the large market, the e-commerce industry has also seen an increase in innovation across platforms, and ancillary segments such as logistics. The market has become conducive grounds for testing various business models such as inventory, social networks, aggregator, and e-commerce marketplace model, among many others.

E-retail market is expected to continue its strong growth momentum. It registered a compounded annual growth rate (CAGR) of over 35 per cent to reach Rs 1.8 trillion or $25.75 billion in the last financial year. Over the next five years, the Indian e-retail industry is projected to exceed 300-350 million shoppers, propelling the online gross merchandise value (GMV) to $100-120 billion by 2025.

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The market has become conducive grounds for testing various business models such as inventory, social networks, aggregator, and e-commerce marketplace model, among many others.

Government Initiatives to Support Entrepreneurs to Expand Business

Since 2014, the government has announced a slew of initiatives, namely Digital India, Make in India, Start-up India, Skill India and Innovation Fund. The timely and effective implementation of such programmes will support the growth of e-commerce in the country and help business owners in this sector to expand business. In a bid to systematise the onboarding process of retailers on e-commerce platforms, the Department for Promotion of Industry and Internal Trade is reportedly planning to utilise the Open Network for Digital Commerce to set protocols for cataloguing, vendor discovery and price discovery. The department aims to provide equal opportunities to all marketplace players to make optimum use of the e-commerce ecosystem in the larger interest of the country and its citizen.

Simultaneously, in order to increase the participation of foreign players in e-commerce, the government also hiked the limit of foreign direct investment (FDI) in e-commerce marketplace model to up to 100 per cent in the B2B models. On the same side, the government made robust investment in rolling out fiber network for 5G that will help in boosting the e-commerce sector in India. Under the Digital India movement, the Centre launched various initiatives like Umang, Start-up India Portal, Bharat Interface for Money (BHIM) etc. to boost digitisation.

The Fintech Collaboration 

The fintech landscape will also see the emergence of innovations that will facilitate holistic financial services over a single mobile interface for the users across the world. The new-age fintech platforms are already offering consolidated fintech solutions to users, enabling them to carry out a range of operations such as spending, lending, investing, fund transfer, etc. Assisted e-commerce on existing B2B2C platforms is another feature that new-age fintech will provide to Indian users in the post-lockdown, post-pandemic future. A B2B2C ecommerce platform gives a company the chance to defend and grow market share directly with the end users, rather than depending on the distributors to market to them at the point of purchase.

Emerging of Hyperlocal Players

The Covid-19 crisis brought a window of opportunity and also the need to do something new. In the new times of lockdown, social distancing and self-quarantine, these hyperlocal players are impacted our lives in a better way. They have played a vital role during these testing times by ensuring that products and services reach our doorstep even though we could not step out. Expansion of delivery points through the digitisation of mom-and-pop stores will be a decisive expansion tactic this year, including building a newer portfolio of services. Along with the entry of traditional players into this ecosystem, consolidation is also expected to surge.

Education Startups to Expand Business Globally

With the rise of Edtech’s such as Byju’s and Unacademy, it is believed that this segment will open new vistas by expanding its footprint and adoption across the ecosystem. It also got a shot in the arm with the online classes due to the coronavirus pandemic. Currently, India has more than 3,500 EdTech startups, and is growing bigger and meeting its aspirational needs. The segment is cutting across K-12, coding, B2B (schools, universities), test preparation, upskilling, reskilling has seen significant traction and robust growth. Companies are using deep learning insights and applying technologies such as including artificial intelligence, virtual reality, augmented reality, behavioural analytics, to improve product and monetisation in early stages, deliver content through the human-centric design process, and gamify to increase engagement and enhance the experience. The segment will grow this year as well and may develop an omnichannel approach to scale up. It is also expected that through merger and acquisitions and consolidation, it will continue to expand both locally and globally.

Preeti Verma
Preeti Verma
An alumna of IIMC, Preeti writes on global and domestic business, life cycle of a business and its stages. Her fourteen years of stint includes The Economic Times, Business Standard, Financial Express, Tehelka, Businessworld and Times Internet.

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