State Of Indian Ecommerce Report Q1 2024, InFocus: Fashion Ecommerce

State Of Q1 2024

Table Of Contents

India’s Digital Economy In A Nutshell

Decoding India’s Ecommerce Opportunity

India’s Ecommerce Landscape: Key Players

India’s Ecommerce Startup Ecosystem

India Vs China Vs USA: A Comparison

Ecommerce Funding Trends (2014 to 2023)

Ecommerce M&As Trends (2014 to 2023)

Top Indian Ecommerce Subsectors & Hubs In Q1 2024

Notable Ecommerce Startup Investors In Q1 2024

InFocus: Fashion Ecommerce

Market Opportunity

Startup Landscape

Funding Analysis

Top Hubs For Fashion Ecommerce Entrepreneurs

How AI & GenAI Can Level Up India’s Fashion Industry

Ecommerce Unicorns & Soonicorns

Ecommerce In India: Key Trends To Watch

Out For In 2024

Ecommerce Startups’ Stock Performance

India To Have 900 Mn+ Active Internet Users By 2025

By 2025, 56% of all new internet users will be from rural areas, and 65% of new internet users will be female 2022

Ecommerce Market In India: A Snapshot

Source: Inc42

India’s Ecommerce Landscape

Source: Inc42

Note: This is not an exhaustive list

India’s $400 Bn Ecommerce Opportunity

The ecommerce market in India is expected to grow at 19% CAGR from 2022-2030

Source: Inc42, BCG, Secondary Sources

India To Have 500 Mn+ Online Shoppers By 2030

Paid users expected to grow at 12% CAGR from 2022-2030

Source: Inc42, Bain & Flipkart Report 2020

Source: Inc42, BCG, Secondary Sources

Indian Ecommerce Engine: The Players Powering India's Online Shopping Bandwagon

Source: Inc42

How

Indian Ecommerce

Startup

Economy Stack Up Against The US & China

Source: Inc42, Secondary Sources

Note: N/A means data not available.

Key Statistics From India’s Ecommerce Startup Ecosystem In 2023

$2 Bn+ Raised By Ecommerce Sector

$1.6 Mn Median Ticket Size

20+ M&As Recorded

D2C Most Funded Ecommerce Sub Sector

Bengaluru Hub With Most Ecommerce Funding

Delhi NCR Accounted For Most Deal Count

Inflection Point Ventures Most Active Investor

Ecommerce Funding Frostbite: 2023 Brings Another Year Of Struggle

Ecommerce funding nosedived by 47% YoY in 2023

Source: Inc42

Top 10 Funded Ecommerce Startups In 2023

Source: Inc42

Note: * Raised in multiple tranches

A Look At Most Funded Ecommerce Sub-Sectors In 2023

Source: Inc42

Ecommerce Vs Fintech: The State Of Funding

Mega deal count down by 56% YoY for ecommerce sector in 2023

Source: Inc42

Ecommerce Startup Funding: Median Ticket Size Dropped To $1.6 Mn In 2023

Median ticket size down by 33% YoY in 2023

Source: Inc42

Ecommerce Funding Remained Skewed Towards Delhi NCR, Mumbai, And Bengaluru In 2023

Source: Inc42

Most Active Ecommerce Investors In 2023

Source: Inc42

Note: This list isn't a ranking of any kind, we have placed investors in alphabetical order

GIVA, Jumbotail, Gynoveda

XYXX, P-TAL, HairOriginals

Kikibix, Freakins, Flash

XYXX, Farmley, Solethreads

Nat Habit, The Sleep Company, Gynoveda

Boingg, Sheerdrive, Happy Nature

Freakins, Wootz.work, Cirkla

NOTO, PeeSafe, Evolved Foods

SuperBottoms, Solethreads, Mokobara

InFocus: Fashion Ecommerce

Value Chain Of Fashion Industry In India

Design and Development

Manufacturing

Fashion Industry in India

Marketing and Sales

Consumtion and Use

Source: Inc42

After-Sale Service

Trend Forcasting

Design Conceptualisation

Fabric Sourcing & Testing

Textile Production

Garment Construction

Quality Control & Testing

Branding & Positioning

Retail Distribution

Ecommerce Platforms

Consumer Behavior Analysis

Fashion Shows & Events

Consumer Persona Identification

Return & Exchange

Product Use/ Care Tutorials

Product Longevity Analysis

Price Range Wise Split Of Fashion Products In India

Luxury Segment (INR 50,000 and above)

High-end Designer Wear

Luxury Brands

Ecommerce Retailers

Premium Segment (INR 10,000 - INR 50,000)

Fashion Industry in India

Marketing and Sales

Mid-range Segment (INR 2,000 - INR 10,000)

Designer Labels

High Street Fashion Brands

Ecommerce Retailers

Source: Inc42

Affordable Segment (Below INR 2,000)

Contemporary Brands

Fast Fashion Retailers

Ecommerce Retailers

Local Boutiques

Street Markets

Ecommerce Retailers

Distribution & Sales Channel For Fashion Brands In India

Marketplace

Social Media Stores

Online

Fashion Brands in India

Distribution Channel

Own Website

Amazon, Myntra, Flipkart, Nykaa Instagram, YouTube, Facebook Shopify, WooCommerce, BigCommerce

Mobile App

App Store, Play Store

Exclusive Brand Store

Offline

Multi-brand Outlets ( MBOs)

Company owned stores

Pop-up Shops & Exhibitions

Franchise Stores

Iconic, Shoppers Stop, Reliance Trends, Lifestyle

Kiosks At Malls & Other Exhibitions

Source: Inc42

The Ecommerce Advantage For Fashion Brands

Cost Advantage

Market Reach

Ecommerce in India

Customer Insights

Operational Efficiancy

Source: Inc42

Brand Visiblility

Lower overhead costs

Reduction in middlemen expenses

Economies of scale in procurement and distribution

Access to a wider customer base

Ability to target niche markets effectively

Opportunity for global expansion

Data-driven decision making

Personalised marketing strategies

Understanding of customer preferences and behavior

Streamlined inventory management

Automated order processing and fulfullment

Fast time-to-market for new products

Enhanced digital marketing opportunities

Increased brand awareness through online channels

Potential for influencer collaborations

Source: Inc42 Analysis, BCG, Secondary Sources

Key Categories In India’s Fashion Ecommerce Market

Children Apparel & Accessories

Source: Inc42 Analysis, Secondary Sources

Note: The market opportunities are estimated based on the segment's share of India's overall apparel market in 2030 | Brands names have been added for reference only

AJAY RAO

EMIZA FOUNDER & CEO

Strategies For Ecommerce Fashion Brands For Optimising Reverse Logistics

In the realm of ecommerce, mastering reverse logistics is indispensable for fashion brands aiming to uphold customer satisfaction, cut costs, and refine operations. Reverse logistics, which encompasses the handling of returns, exchanges, and product repairs, poses distinctive challenges for ecommerce fashion brands. Nevertheless, by strategically planning and implementing effective strategies, these challenges can be transformed into opportunities for optimisation and enhancement.

With 37% of Indian online shoppers returning fashion items, as revealed by PWC India, the significance of efficient reverse logistics for brands cannot be overstated.

Below are key strategies for ecommerce fashion brands to optimise their reverse logistics processes:

Clear & Transparent Return Policies: It is the cornerstone of optimised reverse logistics. Fashion brands in ecommerce should ensure that their return policies are easily accessible and understandable to customers. It's crucial to clearly communicate factors such as return eligibility criteria, return shipping costs, and the process for initiating returns. Transparent return policies foster trust with customers and facilitate smoother return processes, thereby enhancing the overall customer experience.

Efficient Returns Management System: The implementation of an efficient returns management system is paramount for optimising reverse logistics. This system should feature a user-friendly returns portal or interface, enabling customers to initiate returns effortlessly. Providing options for customers to generate return labels and track the status of their returns is essential. Integrating this system with inventory management software allows for real-time updates on returned items, facilitating faster processing and restocking.

For instance, Myntra partnered with Ekart, a logistics provider specialising in fashion returns, to implement the "Easy Returns" programme. This initiative offered customers multiple return options, prepaid return labels, and real-time return tracking, resulting in a 20% reduction in return costs, improved efficiency, and profitability, along with increased customer satisfaction.

Centralised Return Processing Centers: Centralising return processing centers can significantly streamline reverse logistics operations for ecommerce fashion brands. By consolidating returns at centralised locations, brands can enhance efficiency in processing returns, conducting quality checks, and restocking inventory. Centralisation also fosters better coordination between various departments involved in reverse logistics, leading to faster turnaround times and reduced handling costs.

Investment in Technology and Automation: Leveraging technology and automation can greatly enhance the efficiency of reverse logistics processes. Implementing barcode scanning systems, RFID technology, and automated sorting mechanisms improves accuracy and speed in processing returned items. Integration with advanced analytics software enables data-driven insights into return trends and patterns, facilitating proactive decision-making and process optimisation.

For example, AJIO, a leading online fashion platform, partnered with a technology company specialising in AI and data-driven logistics solutions, to implement a customised system. This system utilised AI-powered return analysis, predictive analytics, and automated return sorting, resulting in a 40% reduction in return processing time, a 15% decrease in overall return rates, and enhanced customer communication.

Strategic Partnerships With Logistics Providers: Collaborating with experienced logistics providers specialising in reverse logistics can provide valuable support to ecommerce fashion brands. Partnering with third-party logistics (3PL) companies with expertise in handling returns grants access to specialised infrastructure, resources, and industry knowledge. These partnerships help brands optimise reverse logistics processes, improve efficiency, and reduce costs associated with returns management.

Notably, the collaboration between Myntra and Ekart resulted in a 20% cost reduction and higher customer satisfaction through the "Easy Returns" programme, offering multiple return options and real-time tracking.

Quality Control & Refurbishment Services: Implementing stringent quality control measures is crucial for effectively managing returned merchandise. Ecommerce fashion brands should establish clear criteria for assessing the condition of returned items and categorise them accordingly. Products in good condition can be restocked for resale, while damaged or defective items may require repair or refurbishment. Offering refurbishment services ensures that returned products can be reintegrated into inventory, maximising asset recovery and minimising losses.

Continuous Monitoring & Optimisation: Ecommerce fashion brands should regularly review and analyse key performance indicators (KPIs) related to reverse logistics, such as — return rates, processing times, and customer satisfaction scores. Identifying areas for improvement and implementing corrective measures allow brands to adapt to changing market dynamics and evolving customer preferences. In conclusion, optimising reverse logistics is imperative for ecommerce fashion brands to remain competitive and deliver exceptional customer experiences. By implementing effective strategies such as clear return policies, efficient returns management systems, centralised processing centers, technology and automation, strategic partnerships, quality control measures, and continuous optimisation, brands can streamline reverse logistics processes, reduce costs, and improve overall operational efficiency.

Embracing these strategies enables ecommerce fashion brands to navigate the complexities of reverse logistics with confidence and achieve sustainable growth in the dynamic ecommerce landscape.

Fashion Ecommerce Startup Landscape

Source; Inc42

Note: This is not an exhaustive list

Indian Fashion Ecommerce Startups Secured $2 Bn+ Funding Between 2018 & 2023

Source; Inc42

Note: This is a cumulative representation of funding amount and deal count.

Between 2018 & 2023 D2C Brands Garnered 93% Of Investments Within Ecommerce

Source: Inc42

In The Spotlight: Mumbai Takes Center Stage As India's Fashion Ecommerce Hub

Source: Inc42

Fashion Ecommerce Startups Funding In India: Stagewise Outlook

Late Stage

Source: Inc42

Note: Based on funding recorded between 2018 and 2023

How AI & GenAI Can Level Up India’s Fashion Industry

Key Areas Use Case

Product & Concept Design

Supply Chain Management

Virtual Prototyping And Sampling

Design Inspiration And Trend Forecasting

Fabric And Material Selection

Pattern Generation And Design Iteration

Demand Forecasting

Inventory Optimisation

Quality Control & Assurance

Returns & Exchange Customisation

Virtual Try-On

Dynamic Pricing Marketing & Sales

Customer Support

Personalised Recommendations

After Sales

Automated Return Processes

Return & Exchange Likelihood Predictions

Interactive Tutorials

Customer Support

Source: Inc42 Analysis, McKinsey, Goldman Sachs

Supporting Insights

In 2021, Levi Strauss initiated a machine learning bootcamp aimed at instructing employees on utilising the tech for design endeavors.

Use of Generative Adversarial Networks (GANs) to transform sketches, mood boards, and descriptions into detailed high-quality designs.

Enhance robotic automation in warehouse operations and inventory management with the aid of real-time analytics.

Tailor made return/refund process along with offers can be automated for fashion ecommerce shoppers in India.

McKinsey suggests that embracing generative AI has the potential to increase the operating profits of the apparel, fashion, and luxury sectors by an estimated $150 Bn to $275 Bn.

Utilising AI, Benetton personalised customer recommendations by analysing their browsing and purchase history, leading to a 7% increase in customer spending value.

By combining computer vision technology with generative AI, the return/exchange process for products, including verification, can be automated.

Video GANs have the potential to generate tutorial videos for do-it-yourself (DIY) products like furniture, jewelry, and more

Source: Inc42

Note: This is not an exhaustive list rather a selection of few startups working in this domain.Companies have been placed in alphabetical order.

Indian Ecommerce Unicorns & Soonicorns Unicorns Soonicorns

Note: The list also includes Indian startups that have ever entered the unicorn club. However, some of them might not be valued at or above $1 Bn currently.

Ecommerce In India: Key Trends To Watch Out For In 2024

Quick Commerce For Speed

According to Redseer, between 2022 and 2023, the GMV of quick commerce increased by 77%, rising from $1.6 Bn in 2022 to $2.8 Bn in 2023. In contrast, the overall ecommerce sector experienced a growth of only 14-15%. This data suggests that q-commerce is currently the most dynamic category within ecommerce and is likely to remain so for the next five years.

AI-Integration

From personalised product recommendations online to customised shipping and returns, AI is positioned to disrupt the entire ecommerce industry in India. This is evident from McKinsey's projection that GenAI could contribute $150 Bn to $275 Bn to the fashion industry alone. Such estimates suggest that the overall impact on the retail/ecommerce sector will be significantly greater.

Beyond Metro To Pick Pace

The migration of shoppers from Tier 2+ cities to Indian ecommerce websites is not a recent trend. What's noteworthy is that during the last "Great Indian Festival" by Amazon, 80% of shoppers and 65% of sellers hailed from Tier 2+ cities.

M&As In D2C Brands

The current bear market (excluding AI/GenAI) in India's startup funding ecosystem, coupled with heightened demand for investor exits, is expected to drive increased merger and acquisition activity in the D2C segment in India.

In-house Manufacturing

Driven by the pursuit of quality excellence and heightened geopolitical risks from China, more Indian D2C brands are contemplating establishing in-house manufacturing or assembly facilities for their products. boAt and Lenskart were among the pioneers in taking proactive steps in this direction.

Source: Inc42 Analysis, McKinsey & Company

How Did Listed Ecommerce Startups Performed On The Stock Market

Source: NSE, Inc42 calculations

Note: The latest stock market data used in this slide is as on 17 April 2024

www.inc42.com

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CREDITS

Contact: editor@inc42.com

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