State Of Indian Ecommerce, Q4 2022

State Of Indian Ecommerce

D2C Market Opportunity:

The Next Phase Of Ecommerce

Ecommerce In India: Key Growth Drivers

Growing formal employment: The EPFO accounts on payroll have doubled from 6.1 Mn in FY19 to 12.2 Mn in FY22. This indicates the growing number of employed individuals in the formal sector who prefer borrowing from institutional lenders like banks and NBFCs instead of local money lenders.

Socio-economic

Growing per capita income: The GNI per capita has increased 60% in the past 10 years, from $1,360 in 2011 to $2,170 in 2021, compared to the BRICS’ (Brazil, Russia, India, China & South Africa) average absolute growth rate of 54% during the same period.

Increasing adoption of digital shopping: he rapid adoption of ecommerce outside the vibrant metropolitan cities will be the most critical driver determining this sector’s future growth. The market share of rural online shoppers is expected to rise from 32% in 2021 to 54% in 2030.

Growing smartphone adoption: India had 91 Mn smartphone users in 2012, but the number jumped to 931 Mn in 2022, witnessing a 10.2x growth in 10 years. Globally, the country ranks second in the number of smartphone users. More than 65% of online shoppers in India choose to do their e-shopping on smartphones.

Growing internet penetration: The number of internet users in India is estimated to reach 1.3 Bn by 2030, from 749 Mn in 2020, nearly a 2x rise (1.7x precisely) in 10 years. The rapid spread of digital infra and affordable data prices will further drive digital commerce across the country.

Growing internet speed: Compared to 2019, the average speed of mobile internet (download) in India has more than doubled from 9.11 Mbps (2018) to 18.6 Mbps (July 2022). With the implementation of 5G by March 2023, the internet speed is expected to be up 20x, pushing the average mobile internet speed to approximately 372 Mbps in 2023.

Growing venture capital inflow: Investments in ecommerce startups grew at a 60% CAGR in the five years between 2016 and 2021, making ecommerce the most-funded sector in the Indian startup ecosystem. Out of the $133 Bn raised by the Indian startups between 2014 and Q3 2022, ecommerce accounted for 23% of the capital raised, while D2C startups attracted upwards of $3.4 Bn.

Growing addressable market: The total addressable market (TAM) of ecommerce in India is estimated to reach $400 Bn by 2030, growing at a CAGR of 19% between 2022 and 2030. Fashion and apparel will account for the largest share of the total market in 2030, while beauty and personal care will be the fastest-growing sector.

Proven Exits & Scale: The Indian ecommerce sector has minted the maximum number of unicorns in the country. One in every four unicorns now comes from this sector, indicating their growth potential.

Ecommerce Startup Funding Highly Skewed Towards The Top Three Startup Hubs In India

$30 Bn (2014-Q3 2022)

Due to developed startup ecosystems in Bengaluru, Delhi-NCR, and Mumbai, venture capital inflows into Indian ecommerce startups are heavily skewed towards these top three startup hubs in India. However, investors are increasingly looking at ecommerce startups based outside these top three startup hubs. This can be validated by the fact that startup investments in other cities grew at a 52% CAGR from 2016 to 2021. In addition, total investment in the first nine months of CY22 amounted to $706 million, a 51% increase compared to the previous year. 28 (93%)

Bengaluru, Delhi-NCR & Mumbai Others

Source: Inc42

Note: All data is based on calendar year.

170 Mergers And Acquisitions In Indian Ecommerce Startup Ecosystem Since 2015

Notable Startups Invested

Source: Inc42

Note: All data represented is based on calendar year. The table is based on the number of deals recorded in Inc42’s database between 2014 and Q3 2022

Notable Indian Ecommerce Investors In Q3 2022

InFocus ECOMMERCE FESTIVAL SALES 2022

Source: Clootrack, Inc42 Analysis

Note: This analysis is based on 2,421 customer reviews posted by Indian ecommerce shoppers between September 22 and October 20, 2022.

Regardless of the critical importance of a fluid customer experience on mobile applications, the industry's overall sentiment towards app experience remains negative. Around 65% of the surveyed consumers believe that shopping experiences on leading ecommerce apps are sub-par.

Most Excellent In-App Experience: Tata Neu’s App Experience Relatively Better

Than Its Peers

It was shocking to note that during the online festival sales of 2022, none of the major ecommerce marketplaces in India managed to score more than 5 on a scale of 10.

Source: Clootrack, Inc42 Analysis

Note: This analysis is based on 2,421 customer reviews posted by Indian ecommerce shoppers between September 22 and October 20, 2022. We did not include Amazon India as the company failed to meet the cutoff score for this delighter parameter.

Tata Neu Meesho Flipkart JioMart

None of the major ecommerce players in India was up to the mark in delivering quality customer service during the 2022 festive season. The highest score was below 3.

Source: Clootrack, Inc42 Analysis

Customer Sentiment Analysis: Female Beauty & Personal Care

88% of Indian women who use Indian D2C beauty and personal care products are satisfied with the overall product quality in this segment.

Source: Clootrack, Inc42 Analysis

Note: This analysis is based on 1,997 customer reviews posted by Indian ecommerce shoppers between September 22 and October 20, 2022.

Customer Sentiment Analysis: Male Beauty & Personal Care

It is worth noting that Indian D2C brands have won the hearts of male online shoppers. This is demonstrated by the fact that 82% of customers are satisfied with the quality of men’s grooming products developed by D2C brands.

Source: Clootrack, Inc42 Analysis

Note: This analysis is based on 905 customer reviews posted by Indian ecommerce shoppers between September 22 and October 20, 2022.

Key Ecommerce Players In India: Competitor Financial Analysis FY22

Public Stock Market Performance: Listed Startups

As the lock-in period of pre-existing investors came to an end on 10 November 2022. The stock price of Nykaa (FSN E-Commerce Ventures) has hit a rock bottom.

During its initial public offering, Nykaa's share price was $1.125. The closing price on November 24, 2022, was INR 171.7, a -85% drop from the IPO cut-off price.

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