Whitepaper Indian Retail

7/23/2019 Whitepaper Indian Retail

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E‐Commerce & Online Retail

India – an evolving market with unique challenges



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CONTENTS

Executive Summary .................................................................................................................... 5

Overview Of E‐Commerce In India ............................................................................................. 6

Segments ................................................................................................................................

6

Online Retail ....................................................................................................................... 6

Online Classifieds ................................................................................................................ 6

Online Travel ....................................................................................................................... 6

How The Market Has Evolved ................................................................................................ 7

Phase I: Job Portals And Matrimonial Services .................................................................. 8

Phase II: Adapting Global Business Models ........................................................................ 9

Stakeholders .........................................................................................................................

11

The Venture Capitalists: Capitalizing On Potential .............................................................. 12

Investment Focus: Why Only Inventory Led Companies? ................................................ 12

Regulatory Scenario ............................................................................................................. 12

E‐Commerce Ecosystem........................................................................................................... 13

Indian E‐Commerce Market Size .......................................................................................... 13

First To Second Phase: Key Growth Drivers ......................................................................... 14

Internet

Penetration

............................................................................................................

15

Internet Users In India .......................................................................................................... 16

Investment In E‐Commerce ..................................................................................................... 17

Increase In Deal Size And Frequency Of Funding ................................................................. 18

Investments Across Verticals ............................................................................................... 18

Valuation Bubble .................................................................................................................. 18

Under Pricing And Under Recovery ..................................................................................... 19

Creative Accounting Methods .............................................................................................. 19

VCs Banking On Growth Of E‐Commerce To Make Lucrative Exits ..................................... 19

Impact Of FDI ........................................................................................................................ 20

Challenges For E‐Commerce Sector ......................................................................................... 22

Lack Of Customer Lifecycle Management ............................................................................ 22

Low Rural Penetration .......................................................................................................... 22

Need For Continuous Innovation: Business Models ............................................................ 22



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Competitive Advantage Being Eroded By Low Entry Barrier ............................................... 22

Lack Of Clarity In Laws Governing E‐Commerce .................................................................. 23

Scarcity Of Human Resource ................................................................................................ 23

Online Retail

.............................................................................................................................

24

Organized Sector .................................................................................................................. 24

Online Retail: Mixed Signals ................................................................................................. 26

Reasons For Limited Growth ............................................................................................ 26

Changing Pattern .............................................................................................................. 27

Top Categories Driving Online Retail ................................................................................... 27

Underpenetrated Segments In Online Retail ....................................................................... 28

Structure

Of

Online

Retail

Market

.......................................................................................

29

Focus On Specific Product / Service Category .................................................................. 30

Diversifying Categories Or Getting Acquired By Multi‐Category Players ......................... 30

Key Driver To Target Larger Wallet Share: Diversification ............................................... 30

Specific Category Focused Businesses Will Be Able To Coexist ....................................... 30

Business Models ................................................................................................................... 30

Presence Of The Marketplace Model In The C2C Space .................................................. 31

Deals/Group Buying .......................................................................................................... 31

Key Decision Points .............................................................................................................. 32

Logistics ................................................................................................................................ 35

Last Mile Connectivity ...................................................................................................... 35

Free Shipping .................................................................................................................... 35

Inadequate Capacity And High Cost Of Logistics .............................................................. 36

Substandard Technology Infrastructure ........................................................................... 36

High Charges Levied By Vendors For COD And Returns ................................................... 36

In‐House Facility ............................................................................................................... 37

In‐House Logistics: Costly And Painful .............................................................................. 38

Managing Customer Experience Driving In‐House Logistics ............................................ 38

Tax Issues .............................................................................................................................. 39

Decisions On Warehouses Location ................................................................................. 40

GST: A Boon For All ........................................................................................................... 40



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The Right Business Model For India ......................................................................................... 41

Private Label Products .......................................................................................................... 42

High Margins Of Private Labels ........................................................................................ 42

Private Labels

Already

In

The

E‐Commerce

Market

.........................................................

42

Challenges In Online Retail Market ......................................................................................... 43

Customer Product Experience .............................................................................................. 43

Entry Of Global Players ......................................................................................................... 43

Low Margins ......................................................................................................................... 44

The Impact Of Analytics ........................................................................................................... 45

Key Inflection Points ............................................................................................................. 46

Delivery

And

Logistics

.......................................................................................................

46

Customer Experience ........................................................................................................ 47

Customer Support ................................................................................................................ 47

To Make It Real ..................................................................................................................... 48

About Nangia Group ................................................................................................................ 49

Service Offerings .................................................................................................................. 50

How We Add Value To Our Clients ....................................................................................... 50



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EXECUTIVE SUMMARY

The E‐Commerce industry in India has enjoyed phenomenal growth at a rate of almost 50%

in the

last

five

years.

Although

the

trend

of

E‐Commerce

has

been

making

rounds

in

India

for 15 years, the appropriate ecosystem has now started to fall in place. The considerable

rise in the number of internet users, growing acceptability of online payments, the

proliferation of internet enabled devices and favorable demographics are the key factors

driving the growth story of E‐Commerce in the country. The number of users making online

transactions has been on a steady growth path, and it is expected to reach c. 40 mn users in

2015.

If we look at the investments made in the sector, Venture Capitalists (VC) and Private Equity

(PE) players lead the pack. This is substantiated by the significant increase in the total

investments made in the sector, PEs invested US$467 mn in 2011 against US$99 mn in 2010.

The other significant contribution by VCs and PEs is the expertise and experience they have

gained by investing in the sector in mature markets, which is shared with the investee

companies who are generally at the startup stage.

To ensure that E‐Commerce maintains its growth trajectory, the government needs to

provide impetus on the regulatory front. Unlike most developed countries, India still does

not have dedicated E‐Commerce laws; the current sales tax laws are outdated and are

detrimental to the industry, especially on the logistics and warehousing front. The

introduction of legislation governing and protecting the industry as well as implementation

of GST is a need of the hour.

As consumers spend more time online on Social Media websites, reading reviews, exploring

products or services, be it need based or aspirational, this provides a great opportunity to

the E‐Commerce industry to understand them better and start providing bespoke deals,

content, services et al to them. Though basic analytics is currently used by all players in the

industry, we foresee Big Data Analytics (BDA) driven real time marketing and customer

lifecycle management to become mainstream and necessary not just to improve margins

but to remain competitive against MNC giants like Amazon who have BDA embedded into

their strategy.



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OVERVIEW OF E‐COMMERCE IN INDIA

SEGMENTS

ONLINE RETAIL

This segment has evolved and grown rapidly over the past few years. Cash on delivery, now

considered to be one of the key growth driving factors, is touted to have accounted for 50%

to 80% of online retail sales. Players have adopted new business models including stock and

sell, consignment and group buying; however, concerns surrounding inventory

management, location of warehouses and in‐house logistics capabilities are posing teething

issues.

ONLINE CLASSIFIEDS

The earliest entrant in the E‐Commerce space in India; the online classifieds segment is

undergoing a shift in operational model from vertical to horizontal offering. Players now

offer a gamut of services ranging from buying/ selling cars to event management classifieds.

ONLINE TRAVEL

The online travel segment has traditionally been the largest E‐Commerce subsector (by

revenue) in India. It is now being chased by online retail (in terms of revenue), which is

catching up fast and is expected to match online travel revenues by 2015.

Transactions classified on three broad segments based on the participants involved in the

transaction. E‐Commerce can be broken into four main categories:

E‐Commerce market share by revenue (2012)

Source: The Paypers

Travel 75%

Classifieds &

Retail 25%



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HOW THE MARKET HAS EVOLVED

Growing internet penetration, especially across major cities and evolving consumer mindset,

has enabled

the

E‐Commerce

space

to

touch

new

heights.

With

consumer

habits

changing

constantly, more and more people are finding it convenient to purchase amongst a wide

range of products via internet; most brands have adapted and successfully implemented the

‘Brick and Mortar’ strategy with online presence. The retail world is evolving and retailers

will continue to learn how to best merge offline and online concepts. The market was

initially limited to print media dominated classified services. It has now expanded to include

new internet focused business models, e.g., group buying and social commerce.

The most common

users of B2B online

classifieds are micro,

small and medium

enterprises (MSMEs).

Due to lack of the

requisite financial

resources, these

companies find

it

difficult to market

their products and

services to potential

clients through

traditional media such

as newspapers,

banners and

television. Trade

through online B2B

portals increases the

visibility of MSMEs in

the

marketplace

and

helps them overcome

barriers of time,

communication and

geography.

B2B

The B2C market in

India is the largest

contributor to the

whole E‐Commerce

revenue pie.

Furthermore,

though online

travel has typically

held a major share

of the B2C market,

online retail is also

growing rapidly and

is expected to

significantly

increase its share.

Connecting a large

group of people to

a bidirectional

network has made

this sort of

commercial

relationship

possible. The large

traditional media

outlets are one

direction

relationship

whereas the

internet is

bidirectional one.

Individuals now

have access to

technologies that

were once only

available to large

companies (digital

printing and

acquisition

technology, high

performance

computer, powerful

software).

India’s C2C market,

though currently

small, is set to grow

with the entry of

several players.

These entrants

are

attracting VC

investment possibly

due to significant

growth in traffic

thereby making it

attractive for VCs).

We expect the C2C

segment to show

rapid growth in

coming years.

B2C

C2B

C2C



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The evolution of E‐Commerce in India can be broadly divided into two phases based on the

emergence of various sub segments. Furthermore, distinct developments define each of

these phases.

PHASE I: JO B PORTALS AND MATRIMONIAL SERVICES

The introduction of internet in India in 1995 marked the beginning of the first phase of E‐

Commerce in the country. Moreover, economic liberalization after the launch of reforms in

1991 attracted many multinationals and brought about with itself the much needed growth

in the IT sector. Implementation of liberalization policies led to a complete overhaul of the

license regime, and high taxes and import restrictions, and at the same time facilitated the

growth of small businesses (SMEs). The IT industry and SMEs were the early adopters of

internet. This led to the emergence of B2B, job searches and matrimonial portals.

B2B directory : India’s first online B2B directory was launched in 1996. The

liberalization process of the country’s international trade policies was the key factor

that accelerated the growth of B2B online portals. It enabled buyers and sellers to

easily connect with their global counterparts.

Online recruitment : India’s online recruitment industry took shape in 1997. The

growth of the services sector, following the economic reforms of 1991, resulted in

the more employment opportunities. In view of these happenings, internet proved

• India’s first online

B2B directory

launched

• Launch of India’s first

matrimonial portal

• IT downturn in 2000 led

to the collapse of more

than 1,000 E‐Commerce

businesses in India.

• Entry of low cost

carriers in India

marked the onset of

online travel in India

• Following the global

trend, group buying

and daily deals models

became a sought after

space for

entrepreneurs in India

• Commencement

of the online

recruitment

industry

• Launch of

multiple online

retail websites

1996 1997 2000

2005

2006

2007

2010

• End of slowdown in the

E‐Commerce Industry



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to be an efficient medium that allowed employers and job seekers to connect. Prior

to job portals, weekly government magazines such as Employment News and

newspaper notifications were the primary means for employers and job seekers to

interact.1

Online matrimonial: In 1996, the first online matrimonial portal was launched in

India. A concept unique to India,2 online matrimonial portals transformed the

perception about the matchmaking process from “marriages are made in heaven” to

“marriages are made in cyber space.” Such portals have now evolved to cater to

various segments of the population such as NRIs, H1B visa holders, widows or

widowers, divorcees and other special groups.3

Although online businesses had begun to develop in the late 1990s, the supporting

ecosystem had not been put in place. The first wave of E‐Commerce in India was

characterized by low internet penetration, a small online shopping user base, slow internet

speed, low

consumer

acceptance

of

online

shopping

and

inadequate

logistics

infrastructure.

Thereafter, the IT downturn in 2000 led to the collapse of more than 1,000 E‐Commerce

businesses in India.4 Following this, there was muted activity in the space in India between

2000 and 2005.

PHASE II : ADAPTING GLOBAL BUSINESS MODELS

The entry of Low Cost Carriers (LCCs) in the Indian aviation sector in 2005 marked the

beginning of the second wave of E‐Commerce in India. Travel emerged as the largest

segment. People began relying on internet to search for travel related information and to

book tickets.

As

a ripple

effect,

the

success

of

the

online

travel

segment

made

consumers

comfortable with shopping through the medium, thus leading to the development of online

retail.

Online travel : The decision of LCCs to sell their tickets online and through third

parties enabled the development of Online Travel Agents (OTAs). Prior to the entry

of LCCs in 2005–06, air travel was considered a luxury meant only for the rich and for

corporate travel. LCCs changed the scenario by making air travel affordable for a

large number of people. They developed their own websites and partnered with

OTAs to distribute their tickets online and, thus, contain costs. The Indian Railways

1 “Where cyber evolution meets `rojgaar’,” The Hindu website,

www.hindu.com/thehindu/seta/2003/03/06/stories/2003030600210200.htm

2 “India’s Internet Matchmakers See Potential Boom,” Internet evolution website,

www.internetevolution.com/author.asp?section_id=687&doc_id=160162; “The business of onlinematrimonial sites in India,” Articlebase

website, www.articlesbase.com/marriage‐articles/the‐business‐of ‐online‐matrimonial‐sites‐in‐india‐5242118.html

3 “Matrimonial portals: tradition and technology are a perfect match for those looking online,” India Knowledge @Wharton website,

www.knowledge.wharton.upenn.edu/india/article.cfm?articleid=4331

4“Has Indian E‐Commerce really arrived?,” Globalpost website, www.mobile.globalpost.com/dispatch/news/regions/asia‐

pacific/india/110831/indian‐E‐Commerce‐economyamazon‐internet



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had already implemented the eticket booking initiative by the time LCCs commenced

their online ticket booking schemes.

Online retail : The growth of online retail was partly driven by changing urban

consumer

lifestyle

and

the

need

for

convenience

of

shopping

at

home.

This

segment

developed in the second phase in 2007 with the launch of multiple online retail

websites. New businesses were driven by entrepreneurs who looked to differentiate

themselves by enhancing customer experience and establishing a strong market

presence.

Group buying: Started in 2010, the group buying and daily deals models became a

sought after space for entrepreneurs in India, following the global trend. Group

buying sites have seen a significant rise in the number of unique visitors and

membership. This growth has attracted investments from VCs.

Social networking actively used by organizations to reach out to customers: In the

second wave, social networking gained steam in the Indian online space. It has gone

on to become an integral part of people’s lives. Initially used for staying connected

with friends, social networking websites have now emerged as an anchor in any

company’s digital strategy. Termed as social commerce, it is a key avenue for E‐

Commerce players to reach out to target customers. Companies have started

establishing their presence in the social media space for branding activities,

connecting with customers for feedback and advertising new product launches.



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STAKEHOLDERS

Given the substantial growth in the sector, the list of suppliers is expected to grow

proportionately, as both businesses and individuals are looking to join the E‐Commerce

movement. The customer/buyer has become the crucial point for E‐Commerce players. In

view of this, enablers such as logistics players call centers and even social networking sites

are widening and evolving their offerings to align them with the strategies of E‐Commerce

players. To gain an edge and differentiation power, all the key participants in this

aggressively evolving industry are engaging in innovation to provide a meaningful and value

added experience to their customers.

These participants coordinate among each other to facilitate three main components in an

E‐Commerce transaction:

Logistics and supply chain: Movement of goods from suppliers to end consumers

through E‐Commerce and logistic players

Information processing: Information transmission of orders from customers and

subsequent information flow of order status through the value chain

• Airlines

• Indian Railways

• Service providers

• Individuals

• Individuals

• Businesses

• Retailers /

Manufacturers

• Bus operators

• Companies offering jobs

• Logistics Provider

• Contact Centre

• Financial

Intermediaries

• Social Networking Sites

• Network Service

Providers

• Internet Service Providers

Suppliers

Supporting

Industry

Government

Consumers



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Payment: Payments from consumers to E‐Commerce players and/or suppliers and

vice versa through financial intermediaries

TH E VENTURE

CAPITALISTS:

CAPITALIZING

ON

POTENTIAL

With the underlying opportunities, the industry is set to benefit, driven by strong

fundamentals and provision of continuous assistance by various PE and VC firms to fund

their expansion plans.

INVESTMENT FOCUS: WH Y ONLY INVENTORY LED COMPANIES?

While more than US$350 mn have been invested in Indian E‐Commerce companies over the

past three years, a majority of the capital has gone into only one kind of E‐Commerce

business model, i.e., inventory led E‐Commerce models. The inventory led E‐Commerce

models have

almost

the

same

economic

characteristics

as

the

traditional

brick

and

mortar

model when it comes to inventory risk exposure, warehousing, and sourcing. Even at an

approximately US$65 bn in gross merchandise value (excluding Kindle, AWS and digital

downloads) in 2011, Amazon did not produce more than 0.25% in operating margin from

Amazon.com. The entire Indian E‐Commerce (excluding online travel) is around US$550 mn

and is, at least, 8‐10 years away from the scale, where inventory led model may even turn

profitable5.

REGULATORY SCENARIO

The Indian government has restricted foreign companies from selling their products in India

through the online medium. This regulation safeguards Indian companies against

competition from global leaders such as Amazon. The restriction is also extended to foreign

retail companies that have entered India. However, in the longer term, Indian companies

have to evolve and shield themselves not only from their Indian counterparts but also from

the global E‐Commerce giants as the government might allow FDI in the segment.

Multinational E‐Commerce players such as the Amazon have even got approval from the

government to build large warehouses to stock third party goods. Strategic moves such as

these would support its expansion plans once FDI is allowed.

Moreover, the government’s plan to interlink every Panchayat (village council) of the

country through high speed broadband service by 2014 would aid the sector’s growth. Also,

government organizations’ increasing reliance on the E‐Commerce methodology for their

money related transactions would help the upward trend.

5http://www.vccircle.com/blog/2012/09/03/why‐inventory‐led‐E‐Commerce‐companies‐india‐will‐not‐be profitable%E2%80%A6‐ever



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E‐COMMERCE ECOSYSTEM

INDIAN E‐COMMERCE MARKET SIZE

The Indian

retail

E‐Commerce

market

(B2C

‐C2C)

grew

at

a CAGR

of

49.1%

from

2007

to

2011

to reach a market size of US$9.9 bn. Whereas, the B2B market was relatively a small

contributor to the overall domestic E‐Commerce market, and was estimated at US$50.37

mn in 2011.6

Retail E‐Commerce market size (US$ bn)

Source: IAMAI

Given the dominance of online travel in the country’s B2C E‐Commerce sector, the sector is

typically split into two broad categories — travel and non travel. Online travel is the largest

domestic B2C E‐Commerce segment, accounting for 81% revenues in 2011. The online non

travel market can be further categorized into online retail, digital downloads, financial

services and classifieds.

KEY DRIVERS:

By 2015, annual disposable income of the average household is expected to more

than double itself

People are spending more time online

Rising sales of internet enabled communication devices and PCs

A significant portion of expenditure is expected to be discretionary spending

6 “Digital Commerce,” IAMAI reports, March 2011, p.4; “B2B Online Market – India (Part I),” researchonIndia reports, November 2010, p.4.

20072008

20092010

2011E

23.2 4

6.9

9.9



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Continued penetration of the internet especially towards the rural population which

is not yet been tapped as a potential customer base

Average spend and number of transactions on credit and debit cards on the rise

Increase in the number of payment options

INHIBITORS:

Low internet speed

Lack of enabling infrastructure on the telecom and logistics fronts

High failure rate of online payment transactions

FIRST TO SECOND PHASE: KEY GROWTH DRIVERS

The supporting ecosystem for E‐Commerce has evolved significantly from what it was a

decade ago. Internet is the key to the development of E‐Commerce and has become

pervasive

in daily

life.

People

have

come

to

rely

heavily

on

internet

for

activities

ranging

from accessing email and searching for information to keeping in touch with friends.7

Internet user base has been growing significantly, with an exponential increase in internet

usage. The

growth

is

supported

by

the

increasing

PC

and

broadband

penetration,

coupled

with the declining prices of PCs. Tablets and smartphones have given a new meaning to

7 “India ‐ internet market and forecasts,” BuddeComm, July 2010, p.3; “India ‐ broadband market, internet services and forecasts,”

BuddeComm, July 2011, p.2; “The Indian telecom services performance indicators ‐ July – September 2011,” TRAI, 9 January 2012, p.5;

“India goes digital ‐ a bird’s eye view of the Indian digital consumer industry,”; Avendus, November 2011, p. 8; “MakeMyTrip limited,”

Deutsche Bank, 6 June 2011, via Thomson Research; “Cash on Delivery to be the prominent payment mode for domestic e‐com,” VCCircle

website, www.vccircle.com/500/news/cashon‐delivery‐to‐be‐the‐prominent‐payment‐mode‐for‐domestic‐e‐com; “Report on Internet in

India (I‐Cube) 2011,” IAMAI, November 2011, p.1; “India ‐ Internet ,” IIFL Institutional Equities, 2011, p.1;

T h e nInternet user base close to 5.5

million in 2000

Number of broadband

subscribers as low as 51,000 in

2001

Number of credit and debit cards in India 4.2 million and 0.3

million respectively,

in

1999

No 3G spectrum auctions till 2010

Average time spent online by an

India consumer per month 12.9

hours in 2006

Number of users transacting

online 3 million in 2007

N o w

Internet user base 121 million at the end of 2011.

The number of broadband

subscribers 12.8 million, as of September 2011

Number of credit cards and

debit cards

was

18

million

and

228 million, respectively as of July 2011

3G spectrum auctions in 2010

Increased to 17.4 hours in 2011

Increased further to 11 million in

2011

G o i n

g a h e a dInternet base to increase to 300

million by 2015

Number of broadband

subscribers to reach 100 million

by 2014 and 150 million by 2020

Number of credit cards and

debit cards to reach 73.7 million

and 350.4 million, respectively in

2014

3G subscribers to reach 118

million by 2014 and 303.4

million by 2020

Expected to increase to 21 hours in 2015

Expected to increase to 38

million by 2015



15 | P a g e

connectivity and user experience. The adoption of 3G, coupled with the declining prices of

smartphones, is expected to further increase internet usage in the country.

Improvements on the payment front have brought about the increasing use of plastic

money by Indian consumers. Payment gateways have now been made more secure through

multiple levels of authentication via one time passwords (OTPs) and transaction passwords.

This has helped strengthen users’ confidence in carrying out online transactions. These

enablers augur well for the development of E‐Commerce in India.

INTERNET PENETRATION

Internet statistics in India was 11.4% as of June 2012, one of the lowest worldwide.

Percent of internet penetration by country (June 2012)

Source: Internet

World

Stats

The National Telecom Policy–2011 (NTP–2011) is a step toward increasing technology

adoption in India.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90% 83%80% 80%

78%

49%45%

40%

11%



16 | P a g e

Source: TRAI

INTERNET USERS IN INDIA

India achieved its position as the third largest country worldwide in terms of internet

population when it crossed the 100 mn internet user figure in 2010 and reached 121 mn

users by end 2011. The number of internet users in India is expected to triple to 300 mn by

2015, growing at a CAGR of 25.5%.

Internet users in millions

Source: EY estimates

• High speed and high quality broadband availability to all

village panchayats through optical fibre2014

• Target of 175 million broadband connections2017

• Target of 600 million broadband connections

• Target of minimum 2 Mbps download speed

• Plans to make 100 Mbps connections on demand2020

0

50

100

150

200

250

300

20082009

20102011

20122015F

63 78 93 121

150

300



17 | P a g e

INVESTMENT IN E‐COMMERCE

The second phase of E‐Commerce saw emergence of new business models and new

ventures in

the

domain.

The

E‐Commerce

arena

now

comprises

of

startups

that

are

on

a steep growth curve. However, in order maintain the pace of this growth, these startups

need additional capital to scale up. The need for capital, coupled with the growth potential

of the sector, has made it a lucrative investment option among VCs8 given the current

economic scenario.

India’s E‐Commerce sector attracted US$305 mn (in 37 deals) from January 2011 to

November 2011 (454% more than US$55 mn raised from 12 deals in 2010). Investments in

the sector accounted for more than 20% of total VC investments in the country in 20119.

Funds raised by industry players were used to expand market presence, build logistics and

supply chain capabilities, and enhance technology platforms.

Value of PE investments in Indian E‐Commerce sector (US$ mn)

Source: KPMG

8 “Upswing in E‐Commerce attracts more investors in India,” iamwire website, www.iamwire.com/2011/12/upswingin‐E‐Commerce‐

attracts‐more‐investors/; “Indian e‐com thriving on strong investments, start‐up action,” VCCircle website,

www.vccircle.com/500/news/indian‐e‐com‐thriving‐on‐strong‐investments‐startup‐action

9 “The new targets ‐ venture capitalists have their eyes firmly set on the new batch of E‐Commerce startups,” Businessworld website,

www.businessworld.in/businessworld/businessworld/content/New Targets.html?print=yes

15294

20599 99

467

242

8

6

8

5 5

8

11

0

2

4

6

8

10

12

0

200

400

600

800

2006 2007 2008 2009 2010 2011 2012

(Till April)

Deal Value Average Deal Size



18 | P a g e

INCREASE IN DEAL SIZE AND FREQUENCY OF FUNDING

The main feature of funding received by E‐Commerce players in 2011 was the reduction in

time (by half) between two rounds of funding against 2010 levels. This is due to the need for

funds to scale up rapidly. The average deal size of each round of funding received by E‐

Commerce players

in

2011

was

substantially

more

than

that

received

in

2010.

Deal

sizes

in

the second and subsequent rounds more than doubled in 2011 compared with earlier years.

These increased deal sizes have attracted private equity (PE) funds, which invest in mature

companies. Another noteworthy feature is the increase in the fund size of VCs, which gives

PE players the flexibility to make large investments in high return deals outside their focus

areas10

.

INVESTMENTS ACROSS VERTICALS11

VALUATION BUBBLE

Although new companies do not have any significant differentiator in their businesses, they

have been successful in attracting investments12

. The rapid growth of these companies has

attracted new players. However, most of these companies are not yet profitable and are

only growing

on

volumes.

For

some,

this

might

suggest

that

there

may

be

a possibility

of

a valuation bubble.

10 “VC funds loosen purse strings, dabble in big‐ticket deals,” Mint website, www.livemint.com/2011/11/30231821/VC‐funds‐loosen‐

purse‐strings.html

11 “Six portfolio cos to hit bn dollar mkt cap soon: MD, Sequoia Cap India,” VCCircle website, www.vccircle.com/500/news/six‐portfolio‐

cos‐to‐hit‐bn‐dollar‐mkt‐cap‐soon‐md‐sequoia‐cap‐india; “VCinflows into E‐Commerce zoom,” The Times of India website,

www.articles.timesofindia.indiatimes.com/2011‐03‐22/india‐business/29174344_1_E‐Commerce‐canaan‐partners‐vcs

12 “Whether it is hype or not – E‐Commerce in India continues to grow,” iamwire website, www.iamwire.com/2011/11/whether‐it‐is‐hype‐

or‐not‐E‐Commerce‐in‐india‐continues‐to‐grow/

Online retail, group buying and online travel

segments were the top three segments to receive

funding from VCs in India

VCs were observed to be investing more in vertical

focused niche e‐commerce startups in India

Early stage funding in the e‐commerce sector in

India has also picked up with a few companies

providing seed‐funding and series A funding

Trends



19 | P a g e

UNDER PRICING AND UNDER RECOVERY

One of the reasons that justify this concern is that companies are looking to acquire

customers by selling below the cost price. They are mainly competing on price to overcome

competition — at the expense of investors’ funds. The sales to market cap valuation ratio of

leading E‐Commerce

players

is

around

1:100,

which

implies

a mismatch

between

their

sales,

margins and valuations.

CREATIVE ACCOUNTING METHODS

The second reason relates to accounting methods adopted by E‐Commerce companies.

Some of these are amortizing discounts that they provide on sales as capital expenditure,

based on the premise that this will benefit them in later years, instead of accounting for this

in the year of sale. This leads to inflation of their balance sheets13

.

VCS BANKING ON GROWTH OF E‐COMMERCE TO MAKE LUCRATIVE EXITS

Several VCs are investing in the E‐Commerce space because they feel this is the right time to

invest in the space and do not want to miss out on its current wave of popularity. They think

it necessary to have an E‐Commerce company in their portfolios, as this would allow them

to sell their stakes at high prices14

. The sector would continue to receive funding from VC

and PE players despite concerns relating to a valuation bubble. Early stage–focused PE

players would invest a major part of their funds (40%) in internet based companies by 2014–

15.

Source: Allegro Capital Advisors

13 “Is online retail the next bubble waiting to pop?,” Business Standard website, www.business‐standard.com/india/ news/is‐online‐

retailnext‐bubble‐waiting‐to‐pop/461511/

14 “E‐com hype is driven by cash‐rich VC funds, not wise investors,” VCCircle website, www.vccircle.com/500/news/ecom‐ hype‐is‐driven‐

by‐cash‐rich‐vc‐funds‐not‐wise‐investors; “8 reasons why the E‐Commerce Balloon In India is gonna burst..,” afaqs website,

www.afaqs.com/community/blog/index.html?blogID=16 5_8+reasons+why+the+E‐Commerce+Balloon+In+India+is+gonna+burst

•USD $185mn across 52 firms

Series A

•USD $210mn across 16 firms

Series B•USD $300mn across

7 firms

Further

Rounds



20 | P a g e

Source: Allegro Capital Advisors

IMPACT OF FDI

In September 2012, the government made a landmark announcement allowing 51% FDI in

multi brand retail, subject to certain conditions. Initially, this announcement was applauded

by E‐Commerce players, since it was assumed that this would attract foreign investments in

B2C E‐Commerce. However, the initial euphoria was short lived, since the Department of

Industrial Policy and Promotion (DIPP), an arm of the Ministry of Commerce and Industry,

later clarified that this mandate does not apply to B2C E‐Commerce retail and is applicable

only to retailers with brick and mortar operations. One of the reasons cited for this was the

difficulty encountered in monitoring interstate transactions in E‐Commerce activities.

Therefore, this relaxation does not benefit pure play B2C E‐Commerce players and may not

also benefit retailers engaged in B2C E‐Commerce operations.

Private Label

Apparel &

Others

Apparels &

Accessories

Multi Category

Retailers

US$155 mn US$180 mn US$355 mn



21 | P a g e

Source: The Hindu

E‐Commerce companies’ opinion about the government’s decision on not allowing FDI in

B2C E‐Commerce

retail

is

mixed.

Some

players

are

indifferent

and

maintain

that

this

new

directive does not change anything for them; others have expressed their disappointment15

.

However, consensus is that this may prevent foreign E‐Commerce companies from entering

India16

. They could have brought in the much needed investments in the ecosystem, e.g., in

logistics, payments, to drive market growth. To access foreign capital, some players have set

up a separate entity for activities where 100% FDI is allowed. This covers back end

operations such as logistics, inventory and technology, which enables 100% Indian owned

and controlled front end entities to leverage on the capabilities of these back end

operations. With this new directive, future investments would be routed through the same

path as earlier. A positive aspect of the regulation is that it would buy more time for local E‐

Commerce players

to

consolidate

and

leverage

their

presence

in

India.

Many

of

these

have

made significant investments and have offered steep discounts to generate recurring cash

flows. Therefore, this mandate gives hope to domestic players to not worry about

customers’ defection to global players. While most players are pressing for FDI in E‐

Commerce, when the government will do so is a subject that is open to debate and

conjecture. Overall, Indian players are expected to benefit from the current directive to

consolidate and build their capabilities before facing competition from the eventual arrival

of global players in India.

15 “What do experts feel about E‐Commerce being kept out of FDI in multi‐brand retail,” ,VCC circle website,

www.techcircle.vccircle.com/500/what‐do‐experts‐feel‐about‐E‐Commerce‐being‐kept‐out‐of ‐fdi‐in‐multi‐brand‐retail/

16 “Retail firms with FDI won’t get to do E‐Commerce,” Live Mint website, www.livemint.com/Politics/nkLZlitZlmw53LCq2ENCEM/India‐

wont‐allow‐E‐Commerce‐by‐retail‐companies‐with‐FDI.html

Segment Impact

Foreign sites operating outside India No impact for cross‐border shipment, but

not allowed to set up operations in India

Foreign sites operating in India, but only

listing products or services

No impact since these do not hold or own

inventory

Indian e‐Commerce sites Will come under the FDI directive

B2B portals No impact on their 100% limit



22 | P a g e

CHALLENGES FOR E‐COMMERCE SECTOR

LACK OF CUSTOMER LIFECYCLE MANAGEMENT

E‐Commerce players offer huge discounts to lure people to shop online. However, since

Indian consumer looks for the lowest price before making a purchase, the cost of customer

acquisition is high for these companies. Moreover, since a large number of players offer the

same products at the same prices, switching cost is nonexistent. Consequently, a customer’s

lifetime value is low. This poses a challenge for players in their effort to develop sound

strategies to attract and generate repeat customers.

LOW RURAL PENETRATION

India’s E‐Commerce market is concentrated to urban areas, wherein the bulk of purchases

made are restricted to cities with limited demand from rural areas. This is attributed to

various causes including low internet speed and internet user base (20 mn out of a total of

121 mn in 2011), in spite of rural areas accounting for 70% of the country’s population. The

inadequacy of local language content on E‐Commerce websites is another reason for low

penetration in rural areas.

NEED FOR CONTINUOUS INNOVATION: BUSINESS MODELS

Players in the E‐Commerce space need to adapt to changing business models and innovate

constantly to sustain their businesses. Business models have been changing rapidly in the E‐

Commerce sector owing to heightened competition and the inability of players to sustain

high costs. Some businesses, have become obsolete; some companies in the online retail

segment have completely shut down businesses due to their inability to sustain price wars

with their competitors. Group buying companies, which started off by providing deals at

high discounts, have now begun selling products. The very nature and pace of the industry

necessitates continuous innovation

COMPETITIVE ADVANTAGE BEING ERODED BY LOW ENTRY BARRIER

E‐Commerce sector growth is attracting new players. US$10,000–20,00017

is the initial

investment required to start an online venture. This has led to easy entrance of new

companies to easily replicate the existing business models which in turn increase

17 “The Flipkart story,” The Hindu website, www.thehindu.com/arts/magazine/article3290735.ece



23 | P a g e

competition in the sector. Some operational aspects such as free shipping of products and

COD, which were differentiators earlier are now considered standard practice.

LACK OF CLARITY IN LAWS GOVERNING E‐COMMERCE

With the backdrop of a rapidly growing market, and domestic as well as international

players looking to tap the opportunity within in the sector, the lack of E‐Commerce

governing laws in India is proving to be a hindrance. This poses a challenge for potential

entrants and existing players. Furthermore, the lack of law firms or lawyers specializing in E‐

Commerce laws compounds the problem. The onus is, therefore, on the government to

formulate dedicated E‐Commerce laws so that current issues in the sector’s legal

environment can be addressed. The sector is currently governed by the IT Act 2000, which

regulates the legal obligations of sellers and buyers of goods and services in cyberspace18

.

Apart from

this,

E‐Commerce

players

need

to

comply

with

other

statutory

laws

in

force

in

the country, e.g., the Indian Contract Act and Foreign Investment Regulations as well as

comply with banking and financial laws, where applicable. E.g., financial intermediaries are

required to obtain licenses from the RBI to provide services. Adding to the complexity of

such laws in the country is the fact that legal issues pertaining to the sector differ across

categories of E‐Commerce. Laws regulating E‐Commerce in India are still evolving and lack

clarity.

SCARCITY OF HUMAN RESOURCE

The E‐Commerce sector is growing rapidly, but scarcity of trained manpower is threatening

to slow down this growth. The lack of specialized courses on E‐Commerce at college or

university levels limits the talent pool available to E‐Commerce players. Therefore, the

senior management of E‐Commerce companies needs to expend a considerable amount of

time on hiring (the conversion rate is very low). The attrition rate at some E‐Commerce

companies is as high as 65% at the junior level and 20% at the mid senior management

level19

.Furthermore, due to the competitive nature of the industry, companies poach from

their competitors. This drives up the cost of retention for companies, which sometimes offer

employee stock options (ESOPs) and other incentives to retain their employees.

18 “Legal Requirements Of Undertaking E‐Commerce In India,” CJNews India website, www.cjnewsind.blogspot.in/2012/02/legal‐

requirements‐of ‐undertaking‐e.html; “Legal Requirements To Start An E‐Commerce Website In India,” E‐Commerce Laws And Regulations

In India website www.E‐Commercelawsinindia.blogspot.in

19 “E‐Commerce players see manpower crunch,” Business Standard website, www.business‐standard.com/india/news/E‐Commerce‐

players‐see‐manpower‐crunch/462050



24 | P a g e

ONLINE RETAIL

ORGANIZED SECTOR

Growing at

a faster

pace

than

total

retail

(i.e.

organized

and

unorganized

retail).

Organized retail still forms a small portion of the total retail market.

Positive growth in large number of online retailers moving to the inventory holding

model from the consignment model.

Online retailers are developing in‐house logistics capabilities so as to reduce costs

and achieve management objective.

Logistics players need to gear up their operating models to tap the huge opportunity

presented by online retail.

Complex tax structures are making decisions relating to warehouse locations difficult

for online retailers (applicability of value added tax (VAT) etc.)

Organized retailers

facing

the

big

question

of

entering

the

online

retail

market.

Innovative business models needed by online retailers to take control over

decreasing margins.

Share of apparels expected to increase in online retail.

Underpenetrated segments, such as online groceries, other home and kitchen

products and various ‘easily available categories’ expected to grow.

COD – The preferred payment choice for customers.

Online retail, in its various forms, has been drawing the maximum interest among all the

segments of

the

internet

commerce

market

20

. 60%

of

online

users

in

India

visited

retail

sites

in November 201121

, according to a report published by comScore Inc.

The Indian retail industry was estimated at US$528 bn in 2012 (growing at 11% per annum).

A significant portion (90.4%) of Indian retail is unorganized. Nevertheless, the share of

organized retail is growing at 24% per annum. Currently, online retail constitutes 1% of the

total organized retail market in India and is set to make a higher contribution to the growth

of organized retail in the country.22

20 “Retail in India: Brief Overview,” IBEF website, www.ibef.org/industry/retail.aspx

21 “Online shopping takes off in India: retail web audience grows 18 percent in the past year as nearly 3 of every 5 internet users now shop

online,” comScore website,

www.comscore.com/por/layout/set/popup/Press_Events/Press_Releases/2011/12/Online_Shopping_Takes_Off_in_India

22 “Building a new India – The Role of Organized Retail in Driving Inclusive Growth,” BCG report, February 2011; “Beating the early mover

disadvantage,” IAMAI website, http://www.iamai.in/PCov_Detail.aspx?nid=2534&NMonth=4&NYear=2012



25 | P a g e

Total retail market: market size of the organized and unorganized segments

(US$ bns)

Source: BCG

Size

of

online

retail

market

and

online

retail

as

percentage

of

organized

retail

(US$ mn)

Source: IAMAI

15

19

22

28

35

44

85

262

301

343

346

397

436

484

640

986

0 400 800 1200

2007

2008

2009

2010

2011

2012

2015F

2020F

Organized retail

Unorganized retail

235 258 318

447

572

0

200

400

600

800

2007 2008 2009 2010 2011

1.6%

1.6%

1.6%

1.4%

1.4%



26 | P a g e

According to report, online retail sales of nearly US$572 mn in 2011 and accounted for 6%

of overall internet commerce revenues in India (grew at a CAGR of 25% since 2007). The

market is expected to find rapid growth in coming years.

ONLINE RETAIL: MIXED SIGNALS

Internet retail is not a new phenomenon in India. It saw its share of popularity in the early

2000s, with several portals setting up shop during the period. Some multimedia portals

continued to have sections on online retail that largely focused on catering to the needs of

NRIs looking for means to send gifts to India. Advertising revenue continued to be the

largest source of income for these sites, with the average Indian consumer not showing

much interest in making actual purchases.

REASONS

FOR

LIMITED

GROWTH

While all of the above reasons have contributed to the dismal performance of the segment,

another important reason was limited focus on the real value being delivered. Most of the

products sold online were inferior; there was limited assurance on the products that were

eventually delivered, and customer service was a non priority.

Low internet penetration

An inadequate supply chain

Low propensity to buy online



27 | P a g e

CHANGING PATTERN

The redesigned and innovative entrance of E‐Commerce in India is promising. This

observation is not just based on the unprecedented number of people buying online or the

range of products offered, but is also backed by the emphasis on customers. Products

available online

are

the

ones

that

customers

typically

buy

when

they

go

out

shopping.

In

fact, in some cases, the desired products are not available in shops but are being offered

online. Customer service is amongst the most distinguishing factors, with portals

increasingly thinking of newer ways to delight the average customer.

TO P CATEGORIES DRIVING ONLINE RETAIL

Electronics is the largest category of products selling online in India, with a market share of

61%.Electronics include computers, peripherals, televisions, cameras and mobiles. While

electronics goods

enjoy

the

maximum

popularity

in

India,

apparel

and

accessories

seem

to

be the largest selling categories in leading markets such as the US, the UK and Germany.

This is because of the higher margins that this category generates for E‐Commerce players.

As is the case in leading E‐Commerce markets, we can expect online retailers to shift to

selling higher margin products such as apparel.

The preference for apparels in online shopping is a global phenomenon. According to a

survey conducted by Nielsen in March 2010, books and clothing/accessories/shoes emerged

as the most preferred product categories to be bought online in the next six months. A total

of 44% of the respondents claimed to buy books online in the next six months, while 36%

preferred

clothing/accessories/shoes

23

.

23 “Global Trends in Online Shopping,” A Nielsen Consumer Report, June 2010, p. 2; “Digital Commerce,” IAMAI reports, March 2011, p.10.



28 | P a g e

Products/services intended to be purchased

Source: Nielsen

UNDERPENETRATED SEGMENTS

IN

ONLINE

RETAIL

Product categories sold in organized retail indicate a slightly different scenario from online

retail. Certain segments that command a significant share of the organized retail market are

underpenetrated in the online retail sector. Food services and beverages have a share of

20% of the organized retail market. However, these product categories are still at a nascent

stage in the online retail world.

44.0%

36.0%

32.0%

27.0%

26.0%

22.0%

20.0%

19.0%

18.0%

18.0%

16.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Books

Clothing/accessories/shoes

Airline ticket/reservations

Electronic equipment

Tours/hotel reservations

Cosmetics/nutrition supplies

Event tickets

Computer hardware

Videos/DVDs/games

Groceries

Music



29 | P a g e

Organized retail categories in India in 2010 (%)

Source: BCG

STRUCTURE OF ONLINE RETAIL MARKET

Online retails market comprises with two types of players, niche or single category focused

and general or multiple category focused

Source: Avendus

36%

14%

12%

9%

8%

6%

6%

5%

2%

1%

Clothing

Electronics

Food and beverages

Footwear

Food services

Leisure

Furniture

Accessories

Pharmacy

Health

and

personal

care

Niche or single

category, 54%

General or

multiple

category, 46%



30 | P a g e

FOCUS ON SPECIFIC PRODUCT / SERVICE CATEGORY

The choice of categories ranges across books, electronics, apparel, and baby care products,

perfumes and

even

prescription

lens.

Players

that

emerged

as

category

leaders

were

those

that were able to penetrate their target category deeply to offer a large range of products

by spreading their operations beyond the top cities.

DIVERSIFYING CATEGORIES OR GETTING ACQUIRED BY MULTI‐CATEGORY PLAYERS

Categories such as books and electronics saw early traction, with market leaders moving

toward multi category models. Large players have been on an acquisition spree, acquiring

small single category online retailers to enhance their portfolios.

KEY DRIVER

TO

TARGET

LARGER

WALLET

SHARE:

DIVERSIFICATION

Online retailers incur high costs in their effort to acquire customers through aggressive

marketing and by offering large discounts on products. The underlying thought is to recover

these investments over multiple purchases made by the same customer which consequently

pushes their existing strategies to be molded to incorporate necessary focus on delivering a

superior customer experience to invite future business. A broader product category is a

safer bet to invite customers wanting to buy from their preferred online retailers. A higher

volume of transactions could drive down cost per transaction (economies of scale), thereby

leading to a direct effect on the company valuations also.

SPECIFIC CATEGORY

FOCUSED

BUSINESSES

WILL

BE

ABLE

TO

COEXIST

The vertical focused business strategy exemplifies a thorough understanding of their target

customer segments and product categories. Maintaining category focus enables a portal to

design the entire customer experience around the specific needs of its target segment. This

can enable the portal to become a brand that is larger than the products sold and have

strong bargaining power with its supplier group.

BUSINESS MODELS

An eMarketPlace

is

an

internet

location

owned

by

a company

or

consortium

which

allows

other companies or individuals to get new suppliers or buyers for their products as well as

develop trading networks which makes negotiating, settlement and delivery easier and

more efficient. It is a usual practice to adopt such a model since it gives advantages in terms

of reduced cost and the complexity of putting products up for sale on the web. They also

benefit from leveraging websites (e‐mall) traffic and user base, given the expectation that

visiting other stores on the e‐mall would lead to visits to their stores as well. Smaller

merchants also look to leverage the brand name of the e‐Marketplace, based on the



31 | P a g e

premise that this would lead to increased trust and, therefore, readiness on customers’

behalf to buy products online. Larger merchants sell their products through these virtual

stores, in addition to their own sales channels which leads to multiple sales points. Product

pricing is not controlled by E‐Commerce players and is decided by merchants. For the

purpose

of

billing,

merchants

use

the

common

payment

gateway/method

provided

by

the

E‐Commerce player hosting the platform.

PRESENCE OF THE MARKETPLACE MODEL IN TH E C2 C SPACE

These marketplaces allow consumers to sell products directly to other consumers, either at

a fixed price or through auctions. E‐Commerce players allow monetary exchange through

offering payment modes on their websites or proposing direct payment by buyers to sellers.

Membership or subscription fees from sellers setting up virtual stores, and commission

charges on transactions and advertising fees are various revenue sources for E‐Commerce

players.

DEALS/GROUP BUYING

Group buying offers products and services at significantly reduced prices on the condition

that a minimum number of buyers would make the purchase. It is a common phenomenon

in China where team buying was executed to get discount prices from retailer when a large

group of people were willing to buy the same item. However, this model has been unable to

establish its footing in India.

Deal sites provide daily discount offers in various categories including restaurants, apparel,

lifestyle products and travel. Group buying sites work on the premise that collective buying

leads to

larger

volumes

for

merchants,

who

in

turn

can

offer

attractive

prices

to

consumers.

There is a subtle difference between deals and group buying. In group buying, a minimum

number of buyers are required for a deal to go live, whereas deal sites do not have such

requirements. Most online players in India offer deals; the group buying segment is smaller

in comparison. Deal sites provide another platform for merchants to advertise and sell their

products and services. While small and new merchants may look at group buying as a

marketing option, established brands perceive it or deal sites as another sale channel. This

business model is providing an avenue to offload distressed inventory. Revenue is lost if

capacity is unused in the services sector. Perishable inventory in the services sector, such as

restaurants, spas

and

beauty

services,

can

be

as

high

as

80%

24

. Deal

sites

provide

merchants

a means for reducing distressed inventory in the services sector. Another motivation of

discount selling is building customer loyalty. By taking a cut in their initial deal profits,

merchants aspire for repeat visits and treat the loss as customer acquisition cost.

24 “Snapdeal.com services soon in foreign shores,” Business Line website, www.thehindubusinessline.com/todayspaper/tp‐

marketing/article1009775.ece



32 | P a g e

The fact that customers prefer to buy deals that are in proximity of their localities has led

group buying sites to provide hyper local deals (deals in every major area of a city). Players

are also upgrading technology to understand the buying behavior of customers (based on

their previous purchases) and match the latter’s requirements. Consumers are the key

beneficiaries

of

this

business

model.

Deal

sites

enable

consumers

to

obtain

products

and

services of their choice and in their locality at much lower prices than the original ones.

Consumers are also drawn by the discounts offered and purchase products and services

they would have not bought otherwise.

KEY DECISION POINTS

Inventory related decision. Two models have evolved within eStores with respect to

inventory management25

.

25 “Online retail: Are e‐retail firms in India building a bubble again?,” The Economic Times website,

www.articles.economictimes.indiatimes.com/2011‐07‐19/news/29791081_1_online‐retailers‐e‐retail‐private‐equity; “Bleeding e‐shops

creating shared marketplace,” Mydigitalfc website, www.m.mydigitalfc.com/news/bleeding‐e‐shops‐creating‐shared‐marketplace‐663; “In

India, online retailers take a new tack,” The New York Times website, www.nytimes.com/2011/09/15/business/with‐no‐amazon‐as‐a‐

rivalflipkart‐moves‐fast‐in‐india.html; “What will be the online retail scene in India by 2012,”iMediaconnection website,

www.imediaconnection.in/article/306/Marketing/what‐will‐be‐the‐online‐retail‐scenein‐india‐by‐2012.html; “India’s first online retail

store for all earning needs,” EFYTimes website, www.efytimes.com/e1/72871/fullnews.htm; “Boom time for online kids retail in India,”

Business Standard website, www.business‐standard.com/india/news/boom‐time‐for‐online‐kids‐retail‐inindia/459694/; “Best shoe

forward,” Business Today website, www.businesstoday.intoday.in/story/yebhi.com‐as‐a‐potential‐threat‐to‐flipkart/1/19577.html;

“Online retailing gathers steam in India,” Business Standard website, www.business‐standard.com/india/news/online‐retailinggathers‐

steam‐in‐india/359627/; “India goes digital ‐ a bird’s eye view of the Indian digital consumer industry,” Avendus, November 2011, p.80;

“Top 10 trends in Indian E‐Commerce in 2010,” VCCircle website, www.vccircle.com/500/news/top‐10‐trends‐in‐indian‐E‐Commerce‐in‐

2010

Stock and sell model

Assumes inventory risk and invests

in warehouses logistics

Consignment model

Ships products directly from the

vendor to the customer with no

investments in warehouse and

logistics



33 | P a g e

Online retail in India was traditionally a low entry barrier business, with most players

working on a consignment model based on the following principles:

Online retailers

tied

up

with

networks

of

merchants

to

source

products.

They then prepared web catalogs of products offered by their partner merchants.

Once a customer order was received for any of the catalog items, a notification was

sent to the merchant for its fulfillment.

The merchant then supplied the goods to the customer, and financial settlement was

made between the online retailer and the merchant for the products sold.

The consignment

model

provides

several

inherent

advantages

for

an

online

retailer:

Requires Limited or no investment in inventory or warehousing.

Delivery of goods generally managed by merchants or third party providers

Online payment system and settlement with later executed with merchants

It is pertinent to note that in this model, the online retailer is responsible primarily for

managing the web catalog and the online experience of the customer. Despite the

advantages of the consignment model, online retailers are moving towards an inventory

holding model, wherein players across the industry hold 40% to 80% of the SKU they offer

online as inventory.

Customer

E‐Commerce Player Merchant

Logistics player

Places order and makes

payment

Notifies on receiving the

payment

Local logistics

Merchant ships the

product directly to the

customer through

logistics player

Logistics player ships

product

to

a

local

logistics service

provider

Product delivered



34 | P a g e

The drivers of this initiative are quite apparent when one looks deeper to estimate the

advantages

of

stocking

products

and

selling

them

on

an

E‐

Commerce

player’s

portal.

Ability

to honor customers’ commitments: Meeting commitments on products and services

consistently is the cornerstone of success of an E‐Commerce business. The consignment

model makes online retailers highly dependent on product merchants.

Minimal technology integration with merchants results in online retailers seldom

having adequate visibility of the actual stock situation.

Additionally, meeting delivery commitments is always a challenge when merchants

control the bulk of end customer deliveries.

Managing in‐house inventory enables online retailers to ensure that the right

products (quantity and quality) are delivered within committed timelines. Better

bargains due

to

bulk

buying:

online

retailers

focusing

on

specific

categories

have

the

option of making bulk purchases of fast moving and popular products and, thereby,

obtaining discount in the process. The additional percentage points in their gross

margins can contribute significantly to the overall profitability of their portals.

Innovative pricing and product bundles: Over time, we have seen vertical focused

online retailers.

We see online retailers adopting a hybrid consignment and inventory holding model.

Inventory holding decisions would be based on factors such as the profiles of customers

visiting a portal, unique category positioning, the delivery criticality of certain categories and

historical

sales

numbers.

This

decision

would

also

be

influenced

by

the

degree

of

integration

of technology of merchants, as well as the commercial arrangements of online retailers with

product merchants for product ownership and return gaining an adequate understanding of

customers’ buying patterns, moving away from a cost plus model and playing a larger role in

the pricing and packaging of products. online retailers form innovative product bundles that

are aligned with the unique needs of customers.

Customer

E‐Commerce Player Zonal warehouse

Logistics player

Places order and makes

payment

Local logistics

E ‐Commerce player

ships the product

directly to the customer

through logistics player

Logistics player ships

product to a local

logistics service

provider

Product delivered



35 | P a g e

LOGISTICS

LAST MILE CONNECTIVITY

Last mile logistics constitute online retailers’ key component of service fulfillment. This has

been one of the key areas of focus for online retailers attempting to make the average

Indian customer comfortable with buying products online26

.

Almost all online retailers worked with third party logistics providers to deliver goods to

customers. Lately, several players have begun building their in‐house capability to manage

customers’ deliveries.

FREE SHIPPING

In many of the developed countries, where the E‐Commerce players charge shipping cost

and

its

considered

to

be

a

privilege

if

the

customer

is

offered

free

shipping,

the

Indian scenario is entirely different. Here, it is the primary business strategy for an E‐Commerce

player to provide free shipping cost for the Indian customer doesn’t really appreciate you

charging more.

Many of the E‐Commerce companies are offering their own branded delivery. These

companies have been investing heavily in creating their own delivery networks for a country

like India, which has poor infrastructure and high diversity. Creating your own delivery

network is a huge task and one may not be able to make the economics of it, but at the

same time it should be kept in mind that many E‐Commerce players have achieved a

successful delivery network and are using it as a unique feature over the products they are

offering.

Segmentation of customers for own delivery proposition: Most companies pursuing

customer centricity rely on some form of market segmentation. Segmentation provides

insight into customer behavior, habits, and preferences increasing the odds of success in

marketing, experienced management campaigns, driving brand positioning and product

development. First, customers can be divided into urban and rural area and then on region

basis like Mumbai, Delhi or other metropolitans cities where services are in high demand.

However, the delay in services due to high demand should not affect services given to

customer from the E‐Commerce companies.

26 “Jolly’s Volley: E‐Commerce Challenge No. 2 – Logistics,” VCCircle website, www.vccircle.com/columns/jolly%E2%80%99svolley‐E‐

Commerce‐challenge‐no‐2‐%E2%80%93‐logistics; “E‐Commerce in India – the real challenges?” Pluggd.in website, www.pluggd.in/india/E‐

Commerce‐in‐india‐challenges‐3983/; “Logistics and its challenges in Indian E‐Commerce,” E‐Commerce website, www.E‐

Commerce.etcetra.co.in/2011/06/29/logisticsand‐its‐challenges‐in‐indian‐E‐Commerce/; “Highway bribery: no full stop to unofficial taxes

paid by the truckers,” The Economic Times website, www.articles.economictimes.indiatimes.com/2011‐12‐23/news/30551185_1_check‐

post‐octroi‐rto; “India’s online booksellers try to write a new chapter,” India Knowledge @Wharton website,

www.knowledge.wharton.upenn.edu/india/article.cfm?articleid=4502



36 | P a g e

INADEQUATE CAPACITY AND HIGH COST OF LOGISTICS

Over the last decade, there has been a significant growth in the number of express courier

companies in India, with more than 4,500 companies covering a large number of areas

across the country27

. The substandard quality of physical infrastructure means the cost of

logistics in

India

is

among

the

world’s

highest.

Another

issue

clouding

the

logistics

sector

is

the inadequate airline fleet size of express courier companies. This hinders same day

delivery of products ordered online. The aircraft fleets size of the leading express courier

players in the US and India is 420 and 7 which clearly shows the huge difference in the

logistics support system in India.28

SUBSTANDARD TECHNOLOGY INFRASTRUCTURE

Limited investment and obsolete technology (GPS systems for fleet, bar codes/RFID tags on

packages and hand held devices for their field force) are the primary areas of concern for

logistics

companies

in

India.

This

grossly

limits

the

ability

of

online

retailers

in

India

to

monitor the delivery of shipments and provide accurate information in the event of delays;

whereas such a supporting ecosystem is a norm in developed countries such as the US.

HIGH CHARGES LEVIED BY VENDORS FOR CO D AND RETURNS

Use of third party logistics poses a huge challenge for CoD to prove as a preferred mode of

payment. Some of the reasons are highlighted below:

27 “Express Courier Market – India,” researchonIndia, via ISI Emerging Markets, March 2010

28 Plane Spotters

A

combination

of

fixed

charges

for

the

collection

of

CoD,

along

with a percentage of the shipment value (1% to 2%) charged by

logistics providers, thereby increasing the cost of delivery .Extra charges levied



37 | P a g e

IN‐HOUSE FACILITY

Several economic and operational advantages can be observed when online retailers have

self controlled logistic. As per analysts estimate, in‐house logistics become more cost

effective when average daily shipments of common products such as apparel exceed around

100 deliveries

a day

in

a city.

Some of the key factors that decide the point of breakeven:

In‐house delivery capability is an advantage for organizations that have a high percentage of

shipments on the CoD model or a high return rate. Large companies make savings in terms

of costs on account of returns and at the same time benefit due to the shorter collection

cycles of CoD shipments vis‐à‐vis delayed settlements made by service providers. There

could be other auxiliary benefits of in‐house logistics capability:

Ability to tailor delivery schedules to meet specific customer requirements (urgent

deliveries, specific

time

slots,

etc.)

leading

to

customer

delight

Opportunity to make an impression on customers through trained agents and, if

possible, obtain first hand feedback on services

Cross sell (though this is uncommon in the country)

Delivery team serving the purpose of OOH branding by online retailers

Average value of goods

Physical size of shipmentsReturn

rate

witnessed

by company

Percentage of shipments

delivered with CoD



38 | P a g e

IN‐HOUSE LOGISTICS: COSTLY AND PAINFUL29

Building in‐house logistics capabilities is resource and capital intensive, and can be a

significant drain on costs if not managed efficiently. It puts pressure on the already wafer

thin margins. Scaling in‐house logistics operations to meet growing demand is another

challenge. This

is

one

function

where

the

size

of

manpower

grows

almost

proportionately

to

the volume of shipments. The management of a large workforce has always been an issue. It

is a tradeoff that online retailers need to make between having greater control and working

with a lean organization. Online retailers seem to be moving toward a self controlled rather

than the owned logistics function. In this option, the bulk of manpower is contractual and

leased from existing logistics providers, along with supervisory support. This team works

dedicatedly for an online retailer and brings the required experience to run an efficient

operation. We foresee all online retailers adopting a hybrid model, with a mix of in‐house

and outsourced logistics functions (differing by cities) depending on the evolution of the

organization.

MANAGING CUSTOMER EXPERIENCE DRIVING IN ‐HOUSE LOGISTICS

Logistics players will always find online retail to be an attractive business due to a single

reason, the delivery of products to customers is an inherent part of this segment. However,

many companies have in‐house capabilities because of their strategy to enrich customer

experience with quick delivery. The same speedy delivery cannot be made by outside

logistics support services.

Product delivery is not just the delivery of products to the doorsteps of consumers, but also

an important element in customer experience. Therefore, in order to retain presence in the

onlion logistics

support,

It

is

needful

that

they

effectively

work

on

their

operating

models

to

suit the needs of their online retail customers. Some of the factors are:

29 “China’s E‐Commerce Market: The Logistics Challenges,” ATKearney website, www.atkearney.com/index.php/Publications/chinas‐E‐

Commerce‐market‐the‐logistics‐challenges.html



39 | P a g e

TA X ISSUES

The retail sector in India needs to comply with the regulations of a complex nature and

multiple tax

structure

system

leads

to

increase

in

cost

and

warehouse

location

issues.

This

poses various challenges for E‐Commerce players.

Sellers collect Central Sales Tax (CST), which is levied by the Central Government when

goods are shipped across states. When products are sold within a state in which a

warehouse is located, state governments charge Value added Tax (VAT). As VAT is a

multistage tax and the credit of VAT can be availed only in the same State where the tax has

been paid, it leads to double taxation issues. Currently, CST cannot be offset against any

other tax in India. This means that it is a cost incurred by manufacturers and retailers. This

results in double taxation, since an online retailer passes on costs to consumers. Non

uniform

VAT

rates

levied

by

state

governments,

CST

charge

on

interstate

sales

and

the

retention of VAT in case of interstate stock transfers make it challenging to decide

warehouse location. Octroi and entry tax also increase the transportation costs. All these

issues could force the online retailers to open warehouses in various states, keeping in mind

the tax rate and other related costs of the respective state.

Adoption of new and

upgraded technology

Search for investors

who can fund this

technology adoption

Time sensitivity: Same day

delivery and specific

day/time delivery options

to customers

Focus on last mile

delivery

Making the customer

experience

paramount

Focus on key trends –

Returns management

and CoD services

Training delivery

personnel to take

feedback from customers

Managing

Customer

Experience



41 | P a g e

THE RIGHT BUSINESS MODEL FOR INDIA

Online retail is expected to grow at a rapid pace in India in coming years. While pure play

players

are

expected

to

benefit

from

the

fruits

of

this

growth,

brick

and

mortar

retail companies face the challenge of deciding on the right business model with respect to the

implementation of an online sales channel. Staying off the online medium may imply losing

sales to online retail players. They need to ponder on the following key aspects while

deciding their strategy:

How to enter the online space: through acquisitions, joint ventures or the organic

route

Partnerships with other online retail players

Presence in the offline and online space may present challenges related to:

Pricing decisions

on

the

same

product

sold

via

two

channels

Customer segmentation to ensure that customers are targeted through the

preferred channel

E‐Marketplace Model

Advantages of adopting this model as a

new entrant:

• Low Inventory cost – while carrying

inventory offers enhanced customer

experience, by giving visibility i nto

availability, it often is not a good idea

for an entrant to risk its survival by

increasing inventory carrying cost

• Creation of multiple revenue points:

E‐Marketplace offers the dual

benefits of increasing it sales by

offering own products and by

earning from other sellers who post

their products and services in the

marketplace

Hybrid model

Phase I Phase II

Cash and carry Model

Phase III

• C ustomer comfort – For categories

like apparel or footwear that are

non‐standardized like electronics and

where touch and feel is important,

the offl ine format will help

consumers shed their inhibitions. A

first offline purchase will make them

comfortable to buy the products

online later

• Expansion from online to offline: A

hybrid concept can significantly help

an online retailer to establish its

footing in the offline category due to

existing customer loyalty and brand

value

• A win‐win for all – Cash and Carry

shall bring efficiency in the supply

chain (Reducing middleman) which

will ultimately lead to lower prices

for all types of consumers i.e. Semi ‐

wholesalers, retailers, endc onsumer

• Customer retention – Since it is

usually a membership based model

(Due to discounts availability), an e‐

Commerce player can retain its

customer base



42 | P a g e

PRIVATE LABEL PRODUCTS

According to a TechSci Research research study, Private Label & Indian Consumer Insight

2010, almost 85% of the consumers indicated willingness to purchase private labels

promoted by retailers. Indian consumers, being value conscious, are expected to welcome

private labels

in

the

market.

HIGH MARGINS OF PRIVATE LABELS

Margins on private labels range between 10% and 15% in the case of FMCG products and

touch as high as 40% ‐ 60% for apparel in India.

PRIVATE LABELS ALREADY IN THE E‐COMMERCE MARKET

Private labels have been adopted in E‐Commerce markets worldwide. They have crept into

the Indian E‐Commerce market as well, with a few small players adopting the model to

shore up

margins.



43 | P a g e

CHALLENGES IN ONLINE RETAIL MARKET

CUSTOMER PRODUCT EXPERIENCE

Most Indian

consumers

prefer

to

sample

a product

before

making

a purchase.

And

such

a

method is usually adopted across categories such as clothing, shoes, perfumes and

accessories. The lack of touch and feel or product experience in online shopping could lead

to issues such as wrong product sizes (in shoes and clothing). This poses as a mental barrier

for consumers to shop online31

.

Forrester estimates that Indians spent around US$1.6 bn online on retail E‐Commerce sites

in 2012. The projection is for this number to reach US$8.8 bn by 2016. Despite this

potential, and the ongoing excitement, Indian E‐Commerce is not profitable. Almost 50% of

the E‐Commerce ventures launched in 2012 have shut shop.32

High customer acquisition cost is being driven by low Internet penetration and distrust

around online buying. Most sites spend between Rs 800‐1,500 to acquire a customer.

Considering that the average order size is around Rs 1,500, and that gross margins range

between 3% to 8%, the customer needs to transact over 10 times for the retailer to recover

the acquisition cost.

ENTRY OF GLOBAL PLAYERS

The growth potential of the online retail segment in India has attracted leading international

players. Entry of international players means increased competition. The advanced

technology capabilities that global players possess in areas such as customer analytics and

recommendation engines would pose a challenge for local companies. International players

have larger financial resources than their Indian counterparts thereby enabling them to bear

losses and restrict supplies to their competitors by buying out supplies from vendors. This is

a bigger threat especially for smaller domestic players as this is a threat for their very

survival.

31 “Jolly’s Volley: E‐Commerce Challenge No. 2 – Logistics,” VCCircle website, www.vccircle.com/columns/jolly%E2%80%99s‐volley‐E‐

Commerce‐challenge‐no‐2‐%E2%80%93‐logisticsE‐Commerce in India – the real challenges?” Pluggd.in website, www.pluggd.in/india/E‐

Commerce‐in‐india‐challenges‐3983/; “Logistics and its challenges in Indian E‐Commerce,” E‐Commerce website, www.E‐

Commerce.etcetra.co.in/2011/06/29/logistics‐and‐its‐challenges‐in‐indian‐E‐Commerce/; “Highway bribery: no full stop to unofficial taxes

paid by the truckers,” The Economic Times website, www.articles.economictimes.indiatimes.com/2011‐12‐23/news/30551185_1_check‐

post‐octroi‐rto; “India’s online booksellers try to write a new chapter,” India Knowledge @ Wharton website,

www.knowledge.wharton.upenn.edu/india/article.cfm?articleid=4502;

32“ Forrester estimates that Indians spent around”, http://www.thehindubusinessline.com/features/weekend‐life/can‐indian‐etailers‐be‐

profitable/article4673803.ece



44 | P a g e

LOW MARGINS

The majority of E‐Commerce companies are price players due to the stiff competition they

face and

the

race

to

acquire

the

maximum

number

of

customers.

This

results

in

very

low

margins or none at all. E‐Commerce players could look to adopt new business models to

increase their margins. One such example includes private labels33

.

33 “Private Label Set to Dominate Indian Organized Retail Shelf Space in Coming Years, says TechSci Research,” TEchSci Research website,

www.techsciresearch.com/private‐label‐set‐to‐dominate‐indian‐organized‐retail‐shelf ‐spacein‐coming‐years‐says‐techsci‐research



45 | P a g e

THE IMPACT OF ANALYTICS

E‐Commerce companies have been successful in showcasing their products to consumer in

real time

however

the

ecosystem

around

E‐Commerce

stills

seems

to

be

deeply

penetrated

by companies that are not really interested in establishing an innovative driven business

model with most of the systems working in silos be it logistics, supply chain, marketing, MIS

or customer support.

Given the current competitive scenario, chances of complete wipe outs loom large on the

existing players. And under these circumstances, there are a host of questions that every E‐

Commerce company is anxiously seeking answers to:

Enabling a tighter integration with their critical operation nodes and enabling real time

interventions for critical functions viz. procurement management, delivery logistics,

customer experience, cart tracking, customer loyalty, offer management and customer

support in a unified Omni channel dash boards that can provide insights in real time. The

concept of real time analytics can greatly help an E‐Commerce company to achieve the

overall speed

and

efficiency.

How many visitors on website right now?

What is the conversion probability?

What is the demand and supply pattern?

Where is the delivery status?

Where is the customer shipment status?

How many returns are expected?

What would be the price of the same product

tomorrow?

How many

happy

and

unhappy

customers

created?



46 | P a g e

KEY INFLECTION POINTS

Some the critical functions where real time interventions based on real time analytics can

help are:

DELIVERY AND LOGISTICS

As opposed to a conventional store, where product delivery is immediate and there is no

anxiousness on the part of the customers and the seller. However, there is an element of

waiting i.e. E‐Commerce customers have to typically wait from a day to a week before their

product arrives. This provides anxious moments to customers as well as E‐Commerce

companies because every company wants to know what happens after the order is taken.

Tracking shipments, returns, transportation routing, cost reduction and price discovery in

real time system can significantly help companies to provide value to the customer.

A B

C D

Analyzing in real time the geographic

order pattern and warehouse proximity

to reduce end user product price

Analyzing the current inventory levels

and demand patterns to automatically

trigger price reduction/ increase

notifications the website

Analyze current transportation time for

shipping, transportation cost andpredict approximate delivery time to

the user

Detect early logistics situations such as

freight delay or loading time andautomatically send notification to the

customer with an estimate of delay in

shipping



47 | P a g e

CUSTOMER EXPERIENCE

Personalization is considered to be one of the basic differentiating factors but surprisingly,

most of the E‐Commerce companies have not been able to derive the benefits of providing

customization. The one‐size‐fit‐for‐all criterion is definitely not the appropriate way for all

users.

Highlighted below are some of the advantages that a business can achieve by looking

through the real time analytics window in a more precise and creative manner:

Customization based on behavioral targeting: Analysis of early visits to indicate the

interest of the user

Recommendations and suggestions on real time basis: Reviews by other users of

the same product, demonstrations, video attachments, accessories for the same

product, deliver

and

payment

options,

advertisement

of

loyalty

programs

etc

Customer segmentation: Analyze on real time basis their behaviors and automate

customized offers for each customer

Personalization: To provide customized offerings like name display on website,

modified screen according to user preference can assist in increasing the

engagement from the customer’s end

CUSTOMER SUPPORT

One of the many reasons of lesser interest initially in the website is the inability of the

company to provide a user‐friendly interface. These dropouts have huge implications

because it is not only an opportunity loss but it also negates the marketing effort and costs

involved in driving the traffic to site. Most of visitors/ shoppers drop out of site primarily

because they find difficulty in finding the products, or have doubts, queries, and concerns or

are simply not sure of their choice. This is only possible if we have real time data about the

visitor online. Real time engagement and personalization can be invoked through real time

forms, surveys, asks or chats without being intrusive once there is an actionable insight.

For first

time

users,

use

of

social

networking

websites

can

enhance

convenience

level.

An

instant pop‐up window for a user who has visited twice during a day could induce him to

further explore the product which will greatly help the company to grow its user‐friendly

factor. So the next time a user comes, they will be aware of the search process and how to

go about in the website. Similarly, time specific pop‐ups can also help to achieve the same.

Similarly, for the second time or ‘website friendly user’, various techniques could be

adopted



48 | P a g e

Generally, there are three types of users/ visitors, Dependent, Semi Dependent &

Experienced. Dependent & semi dependent shoppers require some help or support to

complete transactions. Real time tools such as real time chats with the customer

representatives or call solutions, FAQs can resolve their queries and built customer

confidence in

relation

to

the

highly

prevailing

issues

in

the

user’s

mind

such

as

post

delivery

problems faced that the customer may face, who shall provide after‐sale support etc.

TO MAKE IT REAL

The ultimate objective of an E‐Commerce player is to bring the user experience closer or

even better than the real store experience for the customer does value the difference

between the services and convenience offered by the real store operator and an E‐

Commerce company.

The support provided by real time analytics can help reduce the gap between real store

experience not just in terms of price and convenience but also to make the E‐Commerce

company more customers centric. It will help the company to integrate their systems vital

for survival and growth amidst a competitive environment.

Personal messaging to showcase

special attention

Best offer/ deal for users viewing the

site through a mobile/ Hand held device

Conducting feedback/ surveys so as to

engage the customer to receive valuableinsights i.e. any issues that they may be

facing which the website operators wereunable to detect



49 | P a g e

ABOUT NANGIA GROUP

Boutique Chartered Accountancy and

Advisory firm

with

one

of

the

largest

tax and transaction advisory practices

in India

Founded over 30 years ago

Rated as a leading Tax Advisory firm

by International Tax Review

Part of Transfer Pricing Associates

Network Netherlands having network

partners across 50 countries

Global

coverage

through

alliances

in

Australia, China, Dubai, Germany,

Netherlands, and USA

150+ professionals from premier

institutions like ICAI, IITs, ISB among

others, and on track to double team

size in next 2 – 3 years

Considerable experience in working

with and providing advisory services

to

leading

Indian

companies

in

E‐

Commerce and retail sector, we

provide advisory services to major

Indian conglomerates and business

houses as well as Fortune 500

companies from 20 countries with

operations in India

Successfully undergone ICAI

mandated peer review

Registered

with

the

Public

Company

Accounting Oversight Board (private

sector, non‐profit corporation,

created under the Sarbanes‐Oxley

Act) in USA

New Delhi | Mumbai | Dehradun | Singapo re

CA, CFA, CPA, CS

Strategy and

Management

Consultants

Engineers and

Statisticians

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Bodies

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50 | P a g e

SERVICE OFFERINGS

HOW WE AD D VALUE TO OUR CLIENTS

Direct Tax

and

Regulatory

consulting

and

advisory

Indirect Tax

compliance

and

advisory

Transfer

Pricing

Business

Intelligence

and

Analytics

Mergers and

Acquisitions

Corporate

Finance

Audit and

Assurance

1. Full Service

Boutique Firm

2. Low Cost3. Open Source

Solutions

4. Bespoke

Solutions

5. Rapid

Deployment

1 Entire gamut of professional

services under one roof

2 Competitive pricing on account

of lean, efficient and optimised

processes

3 Our solutions are designed on open

source platforms like Hadoop, R Pack,

AML among others to ensure low cost,

scalability and flexibility to make

changes without

external

dependence

4 We believe each of our clients have

unique requirements which need

bespoke solutions instead of

modifying off the shelf products

5 We pride ourselves in our ability to

deploy at a rapid pace, enabling us to

address our Clients’ needs at the earliest



NEW DELHI

Suite ‐ 4A, Plaza M‐6, Jasola, New Delhi ‐ 110025

Tel: +91 (11) 4737 1000, Fax: +91 (11) 4737 1010, Email: [email protected]

MUMBAI

The Summit Level 2, Unit No. 210, Western Express Highway, Ville Parle (East), Mumbai – 400 001

T: +91

(22)

6455

9696,

F:

+91

(22)

2617

4676,

Email:

[email protected]

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Tel: +91(135) 2742026, Fax: +91(135) 2740186, Email: [email protected]

SINGAPORE

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