From buying shoes to booking travel tickets to buying properties, online shopping has become an integral part of lives of many today. India companies have overcome the biggest challenge faced in the Indian market of consumers to have a touch and feel experience and have created a market for themselves. Options like ‘cash on delivery’ and ‘try before you pay’ has helped Indian consumers make a shift to the virtual marketplace. Companies have molded their business models in a way to function according to the Indian mentality based on the ‘trust factor.’
Online platform fits well when you search for needles in a haystack since tapping them through physical stores alone is next to impossible. By funding these game-changing ventures, angel investors in India played an important role in increasing the entrepreneurial activity in the sector. Indian Angel Network (IAN), India’s only national, nimble and Asia’s largest business angel investor network also invested in a few innovative and creative startups. Considering the uniqueness and the potential of these startups of making it big, IAN invested in; Alma Mater, PrettySecrets, Myshaadi and Hungryzone (now justeat.in) increasing the investment activity in the space. An IAN incubatee company, The Shoe Men; an online shoe laundry is another interesting venture.
“With this potential, what is imperative for a young company to grow, or even survive, is to have a robust offline delivery model with high service levels from the logistics teams. And for a venture with detailed operational plan and a high execution team, India provides the ideal growth market. And such a venture is a boon for investors,” said Mr. Ajai Chowdhry, an investor member, Indian Angel Network.
India’s e-commerce industry is although growing at a fast pace but is still at a nascent stage when compared to the global markets. The evolvement of the consumers from just surfing the net to being an aggressive online consumer and carrying out regular transactions online is quite evident. This swift shift has brought the country in spotlight as one of the most important markets giving new ventures an opportunity to garner businesses in the country. According to a recent research done by ebay, with a size of $800 million, the Indian e-commerce market is expected to grow rapidly to $5 billion in 2015. By making a huge investment recently in the Indian market, ebay has only reinforced its research on the on-growing space which has brought freshness in the Indian investment market.
Mr. Manav Garg, an IAN investor member said, “Indian e-commerce is a long term play. It requires a lot of cash to build the business. Investors need a heart of steel. Investors with deep pockets who understand that the play is in solving the inefficient supply chain/logistics/ early customer adoption risk will benefit. Picking up the right team that can address the operational and marketing challenges is the key to successful e-commerce ventures. Indian e-commerce is coming out of infancy. Going forward we will see newer models like subscription based selling will emerge. There will also be room for companies that provide product/ services to the e-commerce ecosystem and logistics / platform for delivery companies.”
For instance, travel and retail form the major piece of the Indian e-commerce-pie. Offering options to the consumers in terms of brand, product range and pricing has worked in favor of these retailers in growing their business online. Although, travel has always been ahead of the curve in terms of visitation and transactions, the growth in retail shows the immense potential that the category holds in India with online retail filling the distribution and convenience gap. The ecosystem to support growth in online retail has also evolved including improvement in logistics and awareness among brands in making the products available online.
This trend led to the mushrooming of a number of innovative startups in the country, catering to the needs of the consumers while providing them with enough preferences to grab the opportunity to increase their customer base. Startups like Flipkart, Myntra and Jabong brought the rage in the Indian online market. It has successfully encouraged and made way for several other innovative startups in diverse verticals like F&B, matrimonial and apparels creating a buzz in the Indian entrepreneurial landscape. E-commerce became the hot favorite amongst the investors as in the past three years, 52 ecommerce start-ups raised $700 million in funding. (Source: Allegro Capital Advisor) Making their way to the Indian market is another breed of companies like Quikr with a C2C model creating a marketplace for sellers and buyers to engage virtually. For the e-commerce space, it can be rightly said, innovation is the key to success.
Although 2012 ended on a good note for the e-commerce startups, in the coming years, companies would need to be more innovative and original to gauge the attention of the investors for funding. Due to the surge in the momentum of the sector, duplication of ideas has been witnessed which has led to the slowdown in the investment activities. Looking at the trends in 2012, the next few years are expected to have a strong growth for players who’re focused on growing categories like apparels and accessories, and niche product categories like baby products, home furnishings, and health nutrition.