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
Smartphone users
7K+ 5G Enabled Indian Cities/towns
SOURCE: IAMAI, INC42 ANALYSIS
Internet Penetration (Active Users) 71% Urban Internet Penetration (Active Users) $0.16 Cost Of 1GB Internet
349 Mn Number Of Female Internet Users Internet users
395 Mn Number Of Male Internet Users
Ecommerce Market In India: A Snapshot
India’s Ecommerce Landscape
Source: Inc42
Note: This is not an exhaustive list
Ecommerce Market In India: Decoding The $400 Bn Market Opportunity
Overall Ecommerce Market
Electronics & Appliances
Food & FMCG
Beauty & Personal Care
Furniture & Home Décor Others
Source: Inc42, BCG, Other secondary sources Note:
India To Have 500 Mn+ Online Shoppers By
users expected to grow at 12% CAGR from 2022-2030
2030
Source: Inc42, Bain and Flipkart Report 2020
How Indian Ecommerce Startup Economy Stack Up Against The US & China
Total Funding (2014 to Q3 2023)
3-Year-Funding CAGR (2019-2022)
Of Unicorns
Source:Inc42, CB Insights, Failory
Indian Ecommerce Startup Ecosystem In Q3 2023
Total Funding Raised
Median Ticket Size Of Investments $224 Mn+ $1.3 Mn+
Total Funding Raised At Seed Stage
Total Funding Raised At Growth Stage $29 Mn+ $113 Mn+
Year-on-Year Decrease In Total Funding Amount
Year-on-Year Decrease In Median Ticket Size -47% -32%
Year-on-year Increase In Total Seed Funding Amount
Year-On-year Decrease In Growth Funding 11%
Top 10 Biggest Ecommerce Funding Rounds In Q3 2023
Sujeet Kumar
Revant Bhate,Utkrishta Kumar,Asish Mohapatra
$224 Mn+ Raised By Indian Ecommerce Startups
In Q3 2023
Compared to the previous year (Q3, 2022) both the funding amount and deal count plunged 47% and 26% respectively
Eyes Off Marketplaces: Investor Enthusiasm Moves Towards D2C And B2B Ecommerce
The dominance of two major players (Flipkart and Amazon) has played a significant role in diverting investor interest from the saturated horizontal marketplace model
Source: Inc42
D2C & B2B Ecommerce Emerged As The Most Funded Sub-Sectors Within
Source: Inc42
2023's Mega Deals: Investors Favor Fintech Over Ecommerce For Big Cheques Investments
In contrast to 2021 & 2022, mega deals in ecommerce startups were 73% lower compared to fintech in 2023
Median
Ticket Size Of Indian Ecommerce Investments Drop By 32% YoY In Q3 2023
From 2020 onward, ecommerce investments look better valued, contrasting with fintech's larger median ticket size
Red Flags For Ecommerce Investments In Q3 2023, Yet Seed Stage Bucks The Trend
D2C startups accounted for 54% of all investment deals in the ecommerce sector, signaling the sustained long-term growth potential in the Indian D2C market
Source: Inc42
Delhi NCR & Bengaluru Were The Top Ecommerce Startup Hubs In Q3 2023
D2C brands were the most popular choice among investors in both Delhi NCR & Bengaluru
Comparative Growth: Q3 2023 Reveals An Uptick In M&As Among Indian
Startups
Compared to Q2 2023, ecommerce startups recorded 2.2x higher deals in Q3 2023
Investors Backing Indian Ecommerce Startups In Q3 2023
KHANAZ K.A
CXO - Simpl
Consumer Trust — The Biggest Frontier Of Growth For D2C Brands
Trust is the foundation of commerce. Commerce only happens when trust is established between buyer, seller and the product. In conventional brick-and-mortar commerce, trust is built through physical interactions and relationships. Ecommerce is obviously different, disruptive to the traditional “first trust, then buy” format of commerce. It is structurally built on “buy first and then trust” principle. If your brand website were a physical retail store, your customers have to pay before they can go to the trial room. Fixing this is at the heart of unlocking ecommerce’s full potential.
In ecommerce, where virtual touchpoints replace face-to-face interactions, the foundation of trust has to be built through deliberate interventions, both tactical and strategic. Every aspect matters – from the content on the website to the seamless experience offered by the checkout process, from the quality of the customer service to the endorsements from influencers. Each touchpoint becomes an opportunity to build and reinforce trust with your consumers.
As of April 2023, Amazon led as the top global online marketplace with 4.8 Bn monthly visits and over 250 Mn loyal Prime members who account for the lion’s share of their GMV. They did this by investing billions of dollars over decades in establishing a predictable, standardised consumer-backwards platform - from UX, pricing, delivery, payments, and buyer protection. With Amazon, you always know where to go and what to expect if you have an order issue, payment failure or defective product. Predictability is how you win trust.
However, for D2C brands, marketplaces are a double-edged sword. At the same time, it gives you immediate scale; building brand and customer loyalty is almost impossible. D2C brands need to offer a similar, if not better, ‘trust first’ experience as marketplaces to improve conversions on your website. Crucial considerations for D2C brands seeking to establish trust include:
Website User Interface
Your website's user interface acts as the main entry point for customers to understand your offerings and why they should choose you directly. Think of your website as your physical store, the shopping experience in a store directly impacts the conversions. Designing for trust means building a user journey prioritising customer experience from discovery, checkout and post-purchase. Over-indexing key trust markers like return and refund policies, integrating your influencer content on the website, verified honest customer reviews etc. Thoughtful, high-resolution website design and product images are synonymous with “authenticity” and hence “trust” in the consumer’s mind.
A Seamless, Trusted Checkout Process
Every new customer on a D2C website/app has to create an account, fill in addresses and pay before they have a conviction on the brand. They don't know if their payments are secure and what to do if something were to go wrong with their order. On marketplaces, these are standardised and predictable. The average cart abandonment rate on a D2C website is 70%, of which almost half are abandoned due to high friction (account creation, address etc).
That is where full-stack checkout and post-checkout solutions like Simpl help. Simpl is a decentralized marketplace that enables a standardized 1-tap checkout across its network of 24,000 merchants. Powered by Simpl’s proprietary khata products consumers are able to shop across its network in 1-tap without having to login every single time on a new brand and enter address, payment details and OTP. Once the order is placed customers can track their orders and seek issue resolution through Simpl’s AI enabled customer support ecosystem. Brands that use Simpl have seen up to 87% increase in conversions and 66% reduction in returns ad up to 34% increase AoVs across 55 different categories. Simpl now powers nearly 1,000 D2C brands across 55 categories such as fashion, footwear, personal care, wellness, travel, home decor, electronics and more.
Effective Customer Relationship Management (CRM)
Acquiring a new customer costs five times more than retaining an existing one. To maximise this, gather data from various sources (email, social media, websites) and centralise it. Leverage each stage of the customer lifecycle as a unique marketing opportunity, crafting tailored campaigns like welcome, abandoned cart, dormant customer, and feedback journeys. A CRM with a journey builder streamlines this process. The right CRM links front and back-office applications, granting a comprehensive customer view. Leverage this capability within your D2C brand to demonstrate genuine care for your customer's needs, fostering trust and loyalty.
Using AI For Conversational Commerce
AI helps suggest additional items for purchase based on what customers have browsed or bought before. This digital shift has made it quicker for customers to decide what to buy, leading D2C brands to focus on creating smooth shopping experiences across different websites and apps. In D2C marketing, new technologies like automated chatbots have cut down waiting times, making it easier to get and keep customers. For instance, when shopping for clothing, AI can assist customers in selecting the accurate size by utilising measurements, streamlining the decision-making process, and clarifying return policies. Another case in point is Lenskart, which revolutionised the eyewear industry through tech-driven innovations.
Data Reporting And Visualisation
Selling products directly to consumers means you get important information about customers and products. However, understanding this data is crucial. It uncovers hidden insights which helps build innovative strategies that meet customer needs.
Having explored the technological aspects, let's delve into effective marketing and strategies that foster stronger communication and trust with consumers.
Performance Marketing Or Influencer?
With around 70% of D2C brands actively engaged on social media platforms, it's essential to consider our audience's limited screen time. Every brand vies for a share of this time, whether through performance marketing or influencer collaborations. An important aspect of marketing is the creatives used in the process, just talking about the product might not be enough, it gets important to educate your customer on why your product is best suited to deliver what it promises to do.
Using Influencers to market your product has proven to be a great way to build trust. Influencers often share their honest opinions and experiences with their followers, which can help potential customers feel more confident about their purchasing decisions. This type of content is often more relatable and authentic than traditional advertising, which can help build trust with potential customers.
For instance, Mamaearth, which specialises in natural baby and mother care products, effectively amplified its reach and credibility through strategic influencer partnerships. While influencer collaborations helped boost credibility, leading brands also attract consumers through performance marketing tactics. Hence, this area demands experimentation for brands to align their objectives and strategies accordingly.
Storytelling, Content Marketing & User-Generated Content
Crafting an impactful narrative and embracing thought leadership is pivotal for your brand's identity. Engage your audience through compelling storytelling, content marketing, and user-generated content. Utilise various mediums like blogs, videos, infographics, and social media to educate, entertain, and forge connections. Establish yourself as an authority in your industry by delivering engaging and informative content that resonates with your audience. This approach will not only strengthen your brand's identity but also build lasting connections with your audience.
Building A Community For Yourself
Creating a community is important for gaining brand supporters. Nykaa did this well. They built a lively community of beauty lovers online. With 17 Mn users each month and over $247 Mn in revenue in FY21, Nykaa became a trusted place for beauty advice and products. Using platforms like Instagram, Facebook, and YouTube, Nykaa shared useful content, earning the trust of loyal customers who relied on their suggestions. This approach made Nykaa a leading beauty and wellness platform in India.
In conclusion, there's no one-size-fits-all strategy for success in the D2C market. Yet, by implementing effective strategies and utilising the right tools for marketing, analytics, AI, and continuous innovation, brands can pave the way for trust, profitability, and sustained growth.
Stock Performance Of Listed Indian Ecommerce Companies
CarTrade is the best performing Indian ecommerce stock this calendar year
Source: NSE, Inc42 calculations
Note: YTD data is up to 19 December 2023
InFocus Online Festive Sales
India’s
$11 Bn+ Total Gross Merchandise Value
20% Three Year CAGR Of GMV
Electronics Most Sought After Category
Value For Money Decisive Factor For Purchase Decision Making
Delivery Experience Key Concern For Shoppers
55% Online Shoppers Were Satisfied With Deals Offered by Flipkart
43% Online Shoppers Were Satisfied With Deals Offered by Amazon
Source: Inc42 Analysis, Clootrack, Redseer
Most Popular Categories During Online Festive Sales
Electronics emerged as the most popular category, fueled by the demand for smartphones and television, which accounted nearly half of the total sales during the festive season
Source: Inc42 Analysis, Redseer, Other Secondary Sources
Note: Festive sales months are from October first week to Diwali for all years
Online Festive Sales 2023: What Drives Customer Attention?
Indian online shoppers prioritise value for money over massive discount offers Delighters: Customer Sentiment
Source: Clootrack, Inc42 Analysis
Online Festive Sales 2023: What Drives Customers Away?
71% customer reviews showed dissatisfaction with this year's online festival sale delivery
Festive Sales 2023: Meesho Emerges As The Go-To Place For Value Deals
Indian online shoppers preferred Flipkart over Amazon for better value-for-money deals this festival season
Source: Clootrack, Inc42 Analysis
Note: This analysis is based on reviews of 18K+ Indian online shoppers between October 1 and November 29, 2023
Most Ecommerce Giants Fail To Provide Delightful Delivery Experience
Poor customer feedback on delivery from market leaders hampers overall online festival sales experience
Source: Clootrack, Inc42 Analysis
Note: This analysis is based on reviews of 18K+ Indian online shoppers between October 1 and November 29, 2023
Festival Sale 2023: More Than Two-Third Indian Shoppers Left Disappointed With Return & Refunds
None of the major ecommerce giants analysed provided satisfactory product return/refund experience during online festival sales
Source: Clootrack, Inc42 Analysis
Note: This analysis is based on reviews of 18K+ Indian online shoppers between October 1 and November 29, 2023
Most Ecommerce Giants Fail To Provide Delightful Delivery Experience
Poor customer feedback on delivery from market leaders hampers overall online festival sales experience
Source: Clootrack, Inc42 Analysis
Note: This analysis is based on reviews of 18K+ Indian online shoppers between October 1 and November 29, 2023
Key Growth Drivers Of Online Festival Shopping In India
Internet & Smartphone Adoption
India has the world's second-largest internet and smartphone user base, just behind China. The current active internet user market is over 759 Mn and is expected to reach 900 Mn by 2025.
Growing Online Shoppers
India has 225 Mn+ online shoppers (30% of active internet users), projected to reach 500 Mn+ by 2030 at a 12% annual rate. Notably, 60% of new online shoppers are from Tier-3 and smaller cities.
Growing Household Income
In 2019, 33% of Indian households had an annual income exceeding INR 5 lakhs. By 2030, this is projected to rise to 49%, equivalent to 173 Mn households.
Young Workforce
India, with 349 Mn individuals under 25, presents a lucrative market for ecommerce and consumer internet segments due to rising household income and internet usage.
Festival Season Offers
The fact that the sale offered by leading ecommerce marketplaces during this time has been marketed as a celebration over a recurring event. The Indian shoppers have developed a degree of stickiness toward this, 39% of Indian shoppers surveyed in 2023 expressed their intention to shop during big online sales during the diwali season.
Availability Of 3PL
The supply chain of Indian ecommerce businesses has been improved and broadened by modern startups like Shiprocket and Delhivery among others, which provide integrated logistics solutions for online businesses of varying sizes
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