selling online in india - expandera internationellt€¦ · source: amazon, flipkart, snapdeal,...

SELLING ONLINE IN INDIA

BUSINESS SWEDEN

India

October 2015

Background of this study

Introduction to India

E-retail market in India

India entry cases

Selling online for Swedish companies

Business Sweden in India

BUSINESS SWEDEN 10 DECEMBER, 2015 4

AGENDA

10 DECEMBER, 2015 BUSINESS SWEDEN 5

INDIA IS THE WORLD’S THIRD LARGEST ECONOMY

BASED ON PURCHASING POWER

38%

53%

26%

30%

36%

17%

1980-81 2014-15

Agriculture

Industry

Services

India’s GDP composition

Share of total

World’s largest economies

Nominal GDP at PPP, 2015

18,9

18,1

7,9

4,8

3,8

4,3

3,2

2,8

0,4

1. China

2. USA

3. India

4. Japan

5. Germany

6. Russia

7. Brazil

8. Indonesia

40. Sweden

India has surpassed Japan to become the world’s 3rd largest economy in PPP terms

This has been enabled by a massive economical shift from agriculture to services over the course

of thirty years

Focus now on growing the manufacturing share of the economy – “Make in India”

SOURCE: RESERVE BANK OF INDIA, IMF, ECONOMIC TIMES OF INDIA


THE COUNTRY IS SET TO BECOME ONE OF THREE

DOMINANT ECONOMIES GLOBALLY

SOURCE: OECD ECONOMIC POLICY PAPERS, 2012

GDP at Purchasing Power Parity

Share of world total

17%

7%

23%

17%

4% 4%

28%

18% 16%

9%

3% 2%

China India US Euro Area Brazil Russia

2011 2030 2060

2030: Parity with

Euro area

2060: Second

only to China


INCREASED DISPOSABLE INCOME AMONG YOUNGER

PEOPLE LEADS TO MORE DISCRETIONARY SPENDING

SOURCE: EUROMONITOR, INCOME AND EXPENDITURE: INDIA, DATAMONITOR

Gross disposable income per household

USD

% o

f to

tal e

arn

ers

in

ag

e

inco

me

ba

nd

0

1 000

2 000

3 000

4 000

5 000

6 000

2010 2011 2012 2013 2014

Sweet spot

Increasing disposable income leading to more demand for discretionary items like fashion apparels,

home décor etc.

The population aged 25-39 have the highest ‘collective’ gross income

In the coming five years, this age group will continue to have the highest gross income in India

+40% in 4 years


INDIAN CONSUMERS ARE MOVING FROM PRICE

CONSCIOUS TO BRAND CONSCIOUS

SOURCE: ECONOMIC TIMES, GUCCI, BUSINESS SWEDEN ANALYSIS

Shopping becoming an experience, not a

necessity

Higher income levels are increasing the

interest in brands

Shopping for basic goods and food is

often done by servants and maids.

Shopping for discretionary items is

therefore more of an entertainment

Brand consciousness and demonstration

effect supports retail sales to a large extent

Increased availability of credit and use of

‘plastic money’ have contributed to a strong

and growing consumer culture in India

India’s first

H&M store

opened on

02 Oct 2015

GUCCI store

in New

Delhi, India

19 cities with more than 2 million people and

additional 34 cities above 1 million people

Various strategies applied to reach right consumers

“Skimming” in tier-I cities becoming less relevant

(but can still work – e.g. Jimmy Choo in

Chandigarh)

Brand-building in metro’s and subsequent

cascading to tier-II cities

Some retailers have seen positive effects from

focusing on a few tier-II cities instead of going

for all-India

Lately, foreign retailers are using e-tailing to reach

affluent customers spread across metros, tier I-IV

cities and small towns


CUSTOMERS ARE NOW SPREAD ACROSS THE COUNTRY

AND NOT JUST RESTRICTED TO METROS

SOURCE: CENSUS OF INDIA

Urban agglomeration / cities in India

Above 10 Mn inhabitants






India entry cases




AGENDA


IN 3 YEARS, APAC RETAIL SALES IS EXPECTED TO

OVERTAKE EUROPE AND N. AMERICA COMBINED

SOURCE: PWC

3,8 4,3 5,0

2012 2015F 2018F

1,4 1,5 1,7

2012 2015F 2018F

0,5 0,6 0,8

2012 2015F 2018F

4,1 4,3

4,9

2012 2015F 2018F6,3

7,6

10,3

2012 2015F 2018F

Retail sales (USD trillion) 16.2 2012 18.4 2015F 22.8 2018F

CAGR %

11

4

5

4

10


INDIAN RETAIL MARKET SIZE IS SIMILAR TO THAT OF

GERMANY

SOURCE: STATISTA, GFK, GTAI, IBEF, BUSINESS SWEDEN ANALYSIS

3 190 3 080

1 600

534 518 495 234

USA China Japan India Germany UK Nordic

Retail sector market size

2013-2014, USD billion, selected major markets

Market size

Population (million)

Per capita spend on retail

(USD’ thousand)

318 1,393 126 1,267 82 64 25

10.0 2.2 12.7 0.4 6.3 7.7 9.3

Highest Lowest NORDIC: SWEDEN (81), NORWAY (62), DENMARK (49), FINLAND (42)


E-RETAIL MARKET IS WITNESSING ROBUST GROWTH

AND WILL QUADRUPLE IN THE NEXT 6 YEARS

SOURCE: PWC, BCG, TECHNOPAK, STATISTA, BUSINESS SWEDEN ANALYSIS

1,0 1,5 2,3 3,5

5,3 7,6

10,6

14,1

17,5 19,9

22,2

2010 2011 2012 2013 2014 2015 E 2016 E 2017 E 2018 E 2019 E 2020 E

E-tailing industry in India

(USD billion)

CAGR

52%

CAGR

27%

Infancy Rapid growth

E-tailing industry in India is estimated to reach USD 22-30 billion by 2020

During the past decade, e-retail sector was held back due to factors such as lower internet penetration,

poor mobile internet connection, Indian retail consumers’ can’t touch, won’t buy mentality, trust on genuinity

of products sold online, and limited availability of product categories online


E-TAILING WILL BE DRIVEN BY INCREASING ACCESS,

LOWER ONLINE PRICE & HIGHER DISPOSABLE INCOME

Increase in the number of internet users and internet penetration

Leapfrog from no internet to mobile

Demographic shift towards higher disposable income

Online lower prices, deals and discounts

Positive PE / VC sentiment and inflow of investments

Innovative tweaks to retail business model

1

2

3

4

5

6

E-retailers are able to sell

more number of units of

current products

Adding new product lines

to satisfy wider consumers

needs

Finding niche segments to

garner first-mover-

advantage

Entry of new e-retailers

with innovate business

concepts


INCREASING NUMBER OF INTERNET USERS WILL OPEN

UP NON-TRADITIONAL CATEGORIES

SOURCE: KPMG, INTERNET LIVE STATS, BUSINESS SWEDEN ANALYSIS

E-retail drivers How is it shaping e-retail

industry Description

5 16 21

32

51

90

155

243

0,5 1,5 1,9 2,8 4,3 7,5 12,5 19,9

2000 2002 2004 2006 2008 2010 2012 2014

Increase in the

number of

internet users

and internet

penetration

Internet users (million)

Internet penetration (%)

Internet users has grown 11 times in the past decade

By 2018, internet users will double and cross 500 million users

1

E-retailers are

experimenting with and

enhancing their App-

platforms

Myntra, India's largest

online fashion retailer has

shut down its website and

switched to an app-only

channel since May 2015

News reports suggest

Flipkart, India’s largest

ecommerce player is

planning to go app-only

from September 2015


‘SHOPPING ON THE GO’ USING MOBILE HAS SHAPED

APP-ONLY MODEL

SOURCE: KPMG, IAMAI, STATISTA, BUSINESS SWEDEN ANALYSIS



110

159

213 236

314

2013 2014 2015 E 2016 E 2017 E

Leapfrog from

no internet to

mobile

Mobile internet users (million)

Indian consumers in rural areas and tier-III cities are

leapfrogging from no internet to mobile towards smartphone

revolution, skipping the desktop PC and laptop steps

2

In order to attract new

customers and capture a

larger market share, e-

retailers have come up with

lower pricing on products

vis-a-vis brick-and-mortar

stores, flash sales,

seasonal sales and more

Bonus discounts for

purchases made through

App-only


LOWER ONLINE PRICES AND DISCOUNTS TO PULL MORE

CONSUMERS TOWARDS E-TAIL

SOURCE: AMAZON, FLIPKART, SNAPDEAL, BUSINESS SWEDEN ANALYSIS



Online lower

prices, deals

and discounts

4

Major e-retailers are expanding their delivery

reach to interior parts of India

For instance, Amazon India has chosen India

Post as its primary delivery partner servicing

over 19,000 pin-codes through 140,000 post-

offices across the country


INNOVATIVE TWEAKS TO FILL-IN THE BUSINESS MODEL

GAPS SUCH AS…

SOURCE: BUSINESS SWEDEN ANALYSIS

E-retail drivers How is it shaping e-retail industry Description

Innovative

tweaks to retail

business

model

Free and

quick

home

delivery

Indian customers have started

to expect door delivery of

goods, from small pocket book

to a large furniture, free of

charge or at a minimal cost

E-retailers have come-up with a friendly return

policy, wherein consumers can return

damaged/defective goods with 7-30 days

timeframe depending on the product category

Friendly

return

policy

Certain consumers might want

to return damaged/ defective

goods, whereas others might

have a second thought about

purchasing a particular product

E-retailers gambled and introduced ‘Cash on

Delivery’ system, a unique collection process

that allowed the customer to make cash

payments upon receiving the goods

Today, all major e-retailers have cash on delivery

as a payment option

Cash on

delivery

India has lower credit and debit

card penetration

350 million debit cards and 19

million credit cards in 2014, as

per Reserve Bank of India

6


…CASH ON DELIVERY, MAKING IT THE MOST WIDELY

USED PAYMENT MODE

SOURCE: TRAK.IN, IAMAI, BUSINESS SWEDEN ANALYSIS

45%

21%

16%

10% 8%

Cash ondelivery

Debit card Credit card Internetbanking

Mobile wallet

Mode of payment in Indian e-tailing industry

2014

Cash on delivery is a popular mode of

payment and has been one of the

defining pillars of India's ecommerce

boom. Every 1 out of 2 payments are

made through cash on delivery

37% of online Indian shoppers pay

through debit and credit card mode of

payment

Mobile wallets, which have seen a

surge of activity in the last few

months, contribute 8% of all

payments

In India, many customers tend to

prefer cash on delivery as the online

payment modes are yet to catch up in

many parts of the country

Product categories Global avg. India US UK Germany Japan China

Electronics 77% 79% 83% 84% 90% 53% 96%

Home appliances 59% 67% 46% 65% 58% 41% 83%

Home furnishings 53% 59% 56% 65% 66% 53% 65%

Apparel & fashion 76% 84% 87% 85% 88% 66% 97%

Sports & outdoor 52% 52% 56% 53% 66% 36% 78%

Beauty products 57% 68% 50% 56% 62% 48% 85%

Household items 45% 60% 36% 48% 40% 41% 84%

Groceries 45% 52% 26% 60% 36% 68% 90%

Toys, kids, babies 49% 61% 48% 53% 49% 32% 75%

Music & games 62% 65% 74% 75% 66% 46% 69%

Books 73% 70% 82% 82% 80% 65% 89%


OVERALL, INDIAN CONSUMERS SEEM WILLING TO BUY

MOST THINGS ONLINE

SOURCE: A. T. KEARNEY

>75% have bought the category online 50%-75% have bought the category online <50% have bought the category online

% respondents who said they have bought category online during 3 month period (May-July 2014)


INDIA’S E-TAILING ECOSYSTEM HAS PLATFORMS FOR

EVERY CATEGORY


Big 3

Horizontal online

market place

Vertical product

category champions

Apparel and fashion

Furnishing

Grocery

Beauty and wellness

.

.

and more


HEATING COMPETITION BETWEEN BIG THREE

HORIZONTAL ONLINE MARKETPLACES

SOURCE: MORGAN STANLEY IN BUSINESS STANDARD , ECONOMIC TIMES, CRUSHBASE.COM, FINANCIAL

EXPRESS, BUSINESS TODAY

Year started Oct 2007 Jun 2013 Feb 2010

Marketplace since Apr 2013 Jun 2013 Sep 2011

Revenue (2013-14) USD 451 million USD 27 million USD 26 million

Annual GMV * USD 4.5 billion USD 2.0 billion USD 3.5 billion

Unique visitors

(UV)** 23.5 million 23.6 million 17.9 million

% change in UV*** 80% 142% 90%

Registered

customers 45 million 25 million 40 million

# of sellers 30,000 18,000 100,000

Product range 10+ million 17 million 10+ million

Funding so far USD 3.2 billion USD 2.0 billion USD 1.1 billion

* GMV: Gross Merchandise Value - total sales value of the merchandise sold in 2014-15

** For the month of May 2015

*** % change in in the number of unique visitors since May 2014 to May 2015

44%

32%

15%

9%

Flipkart

Snapdeal

Amazon

Rest

E-retailing market share by players

2014, by GMV*


FOUR TYPES OF ONLINE RETAILERS AND

MARKETPLACES

SOURCE: INFOSYS, PWC

Pure inventory led model Hybrid model Managed marketplace Pure marketplace

Sells only owned inventory

Does not sell 3rd party

products

No used goods

Prices are fixed

Control on fulfillment and

return

Sells owned inventory

Sells 3rd party products

also

No used goods

Prices are fixed


return

No owned inventory

Sells only 3rd party

products

No used goods

Prices are fixed


return

No owned inventory

Sells only 3rd party

products

Used goods are allowed

Prices are discovered

No control over fulfillment

and returns


MYNTRA: AMBITIOUS PLANS TO TIE-UP WITH 40-50

FOREIGN BRANDS OVER THE COMING 6-12 MONTHS

SOURCE: INTERVIEW WITH MYNTRA

For in-house designed

brands

Private label Multiple brands International

business

Myntra

Caters to brands

currently sold in India

through brick-and-

mortar

Caters to foreign

brands with no

presence in India

Started international

business division with

a focus on brining

foreign retailers into

India

2014

2015

2016

Currently 20 global

brands sell through

this platform

Major brands are from

the US, UK and

Europe

Target of adding 40-50

international brands by

first half of 2016

Foreign brand tie up




India entry cases




AGENDA

Motorola Mobility re-entered the Indian

market in February 2014 (after shutting

down its Indian website in Nov 2012)

Selected e-retail only channel for re-entry

Tied-up an exclusive agreement with

Flipkart

Sold 2.5 million handsets over 9 month

period or 9,200 units per day (Feb-Oct

2014)

Witnessed a sharp turnaround within 9

months, based solely on ecommerce

platform

So far launched multiple products through

this route: Moto G, Moto E, Moto X, Moto

G (2nd gen), Moto X (2nd gen) and Moto

G (3rd gen)

Will continue to be an online-only player

and partner exclusively with Flipkart


MOTOROLA: THE TREND SETTER IN E-TAILING ONLY

ROUTE

SOURCE: THE HINDU, BUSINESS INSIDER, TECH CIRCLE, TRAK.IN, BGR MEDIA

FLIPKART WEB-PAGE DURING THE LAUNCH OF MOTOROLA PHONE

Dorothy Perkins, a UK-based fast

fashion and apparel brand, entered the

Indian market through Jabong in March

2014

Signed a three year exclusive contract

In less than a year (February 2015),

Dorothy Perkins emerged as one of the

top three women apparel brands selling on

Jabong

70% of its sales in India comes from

dresses and the rest from bags, shoes

and accessories

Products are priced at par with global

pricing at INR 1,500-5,000 (SEK 185-650)

"Print ads and bloggers' opinion writing

would be our next step to promote the

brand. A brand ambassador programme is

also in our priority list“

- Alex Maw

Marketing Director, Dorothy Perkins


ENTERING INDIA THROUGH ONLINE-ONLY CHANNEL:

BRITISH BRAND DOROTHY PERKINS

SOURCE: INFOSYS, PWC

SCA is present in India since 2011

Selling major brands such as Libero (diapers),

Tempo (tissues), Tork (paper hand towels) and

Tena (adult diapers)

In 2014, SCA decided to ramp-up its India

operations and to become a significant player

Focus on e-commerce channel to distribute

products

Tied up with leading e-tailing portals such as

Snapdeal, Firstcry, Amazon, and PayTM to

reach out to the Indian consumers in the tier 2

and 3 cities

“Currently, online sales account for more than 20%

of India sales and is exploding”

- Cecilia Edebo

Managing Director at SCA India


SWEDEN’S SCA: SALES RAMP-UP THROUGH E-TAILING

CHANNEL

SOURCE: FORBES INDIA, SCA, BUSINESS LINE, INDIA RETAILING


TESTING THRU E-TAIL AND EXPANSION TO BRICK-AND-

MORTAR STORES: SPANISH BRAND DESIGUAL

SOURCE: INDIAN RETAILER, FASHION UNITED, FIRST REPORT, FRONTIER MAGAZINE

India entry thru e-tail route

Change of e-tailing partner

Launch of brick-and-mortar

format

Scaling-up of brick-and-mortar

Desigual entered the Indian market through an exculsive deal with etailer Jabong

in December 2012

Inked an exclusive tie-up with Myntra in April 2014, following contract expiry with

Jabong

Entered brick-and-mortar space by partnering with Shoppers Stop in April 2015

Launched a first-of-its-kind Desigual shop-in-shop located at the Shoppers Stop

store in Mumbai

Scale-up of brick-and-mortar presence through ‘travel retail stores’ in partnership

with The Nuance Group

Opened duty free outlets at Mumbai and Bangalore international airports




India entry cases




AGENDA


ADVANTAGES FROM GOING THE E-RETAIL ROUTE


Reach

Marketing and analytics

support

Working capital

Get instant access to (almost) the entire Indian sub-continent

Reach affluent customers with high spending power in tier I-IV

cities and small towns accounting for 40-70% of e-tail sales

Take advantage of marketing support for promoting brand visibility,

sales promotion, and product launch assistance

Make use of analytics for optimizing and focusing sales effort

Lower investment and low working capital requirement vis-à-vis

traditional brick-and-mortar route

Try new markets while focusing on your core markets and activities


THREE WAYS TO GET ONLINE FOR SWEDISH BRANDS

Go through local distributor with significant online

presence 1

Direct tie-up with e-retailer 2

Go through an international market place via boutique /

authorized reseller in Europe 3

(Flipkart) (Amazon India)


1. GO THROUGH LOCAL DISTRIBUTOR WITH

SIGNIFICANT ONLINE PRESENCE

Swedish brand Local distributor

(WS Retail)

E-retail platform

(Flipkart)

Sweden India

Swedish brand ships

goods to WS Retail

Inventory maintained

by WS Retail

Products picked from

WS Retail, packed

and delivered

Shipping time of 10-

15 days

2-5 days 1-4 days

Receives money

less all costs from

distributor

Deducts warehousing

charges, commission

and in-bound logistics

from payment

received by Flipkart

Deducts commission,

out-bound logistics

and payment charges

from the total

payment made by

customer

Customer makes

total bill payment

to Flipkart

Places order for

products


2. DIRECT TIE-UP WITH E-RETAILER

Swedish brand E-retail platform

(Myntra)

Sweden India

Swedish brand ships

goods to Myntra

warehouse

Inventory maintained by

Myntra

Products shipped to

customers

Shipping time of 10-

15 days

1-5 days

Receives money

less all costs from

Myntra

Deducts commission,

logistics, warehousing

and payment charges

from the total payment

made by customer

Customer makes

total bill payment

to Myntra

Places order for

products




India entry cases




AGENDA

10 DECEMBER, 2015 BUSINESS SWEDEN 46

BUSINESS SWEDEN INCREASES BUSINESS ABROAD

WHILE ATTRACTING INVESTMENTS TO SWEDEN

OUR VISION

GROWING SWEDEN BY BEING A WORLD CLASS

PROMOTER OF TRADE AND INVESTMENTS

OUR MISSION

WE ACCELERATE AND FACILITATE BUSINESS

WITH SWEDEN

OUR OWNERSHIP

JOINTLY OWNED BY THE SWEDISH

GOVERNMENT AND BUSINESS SECTOR, WE

OFFER THE BEST OF BOTH WORLDS


WITH OFFICES IN 57 COUNTRIES, BUSINESS SWEDEN IS

WELL POSITIONED TO GROW SWEDEN


BUSINESS SWEDEN HELPS SWEDISH COMPANIES FULFIL

THEIR INTERNATIONAL POTENTIAL

Examine opportunities

and choose market

Export Information

Steps to Export

Trade Facilitation

Market Selection Analysis

EVALUATE

OPPORTUNITIES

CHOOSE

STRATEGY

ESTABLISH

PRESENCE

GROW

BUSINESS

Understand market and

define entry strategy

Market Analysis

Visiting Program

Market Entry Strategy

Partner Search

Bus. Opportunity Project

Establish presence in

foreign markets

Incorporation

Business Support Office

Acquisition Support

Recruitment Services

Sourcing Services

Develop and grow your

international business

Sales and Marketing

Support

Operational Support

Business Development

BSO Connect

BUSINESS SWEDEN INTERNATIONALISATION SERVICES

PROMOTIONAL ACTIVITIES

Swedish companies can use the official brand of Sweden to open doors and acquire new contacts. Business Sweden

arranges seminars, site visits, trade fairs, delegations, conferences and many other activities to strengthen brands and to

increase the visibility for Swedish companies


25 COLLEAGUES ACROSS TWO OFFICES IN INDIA

Experience Presence Knowledge Network

Established in 1996

Export support

activities in India since

the 1950s in Kolkata

and Mumbai

Yearly Track Record:

250 projects

20 incorporations

600 queries

Four experienced

investment advisers

Two offices

New Delhi and Bangalore

Additional support

through Swedish

Consulates in Mumbai,

Chennai and Kolkata

Support across South

Asia through Swedish

Consulates in

Bangladesh and Sri

Lanka

25 experienced

consultants

Focus on international

business development

Mainly locally employed

Speak 10 languages

combined

Combination of industrial

and consulting

experience

Represent Official

Sweden in India

Dual ownership

between Swedish Gov

and Industry

Brand Sweden

Swedish Embassy

Swedish companies

Indian business and,

government bodies


WE CAN HELP YOU FROM PLANNING TO EXECUTION

Conduct a brief market check on the Indian market Market check

A deep-dive study aimed at understanding the Indian market Market analysis

Local partner / distributor identification that fits your requirement Partner search

Support you in meeting distributors / e-retailers through visiting program Visiting program

Presentation by Business Sweden representative to selected prominent three to five

e-retailers Local representation

Express your brand interest in India

Collection of product catalogues from e-retailers Marketing support

NEW DELHI

Business Sweden

Embassy of Sweden, Nyaya Marg,

Chanakya Puri, New Delhi-110021, INDIA

T +91 11 46067100

[email protected]

www.business-sweden.se/indien

CONTACT US

BUSINESS SWEDEN IN INDIA

BANGALORE

Business Sweden

Kheny Chambers, 4/2 Cunningham

Road, Bangalore 560052

T: +91 80 415 29100

[email protected]

www.business-sweden.se/indien

We are located in India since

1995 and have offices in

Bangalore and New Delhi.

From our offices in India, we also

cover Afghanistan, Bangladesh,

Bhutan, Maldives, Nepal,

Pakistan and Sri Lanka

mailto:[email protected]



http://www.business-sweden.se/indien









selling online in india - expandera internationellt€¦ · source: amazon, flipkart, snapdeal,...

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