Landscape of Internet Retail in India By Vikram Sehgal

Making Leaders Successful
Every Day

E-Commerce Landscape &
Opportunity in India
Vikram Sehgal
Vice President, Forrester Research

January, 2013

The Indian Online Population to Grow at
an Impressive 25% CAGR
600 40%
35%
500
30%
400
25%
300 20%
15%
200
10%
100
5%
0 0%
2010 2011 2012 2013 2014 2015 2016 2017
(F) (F) (F) (F) (F) (F)
Online Population Online Population % of Total Population
Source: FORRESTER RESEARCH WORLD ONLINE POPULATION FORECAST, 2012 TO 2017 (GLOBAL)

© 2012 Forrester Research, Inc. Reproduction Prohibited 3

Internet Access Channels, Metro India

Home 68%

Work 38%

Internet cafe 22%

Friend or relative's house 5%

School 5%

Outdoors 2%

Library 1%

Somewhere else 0%


The Promise of e-commerce


New eCommerce Markets Often Follow
A Similar Path


Countries Are At Different Phases


Online Retail Spending to grow at 57%
CAGR

Billions Total online retail spending
INR 450 INR 411
INR 400 Computers &
INR 350 Electronics
INR 282 Beauty &
INR 300 Cosmetics
INR 250 Media
INR 186
INR 200 Apparel &
INR 150 INR 118 Footwear
Appliances
INR 100 INR 75
INR 42 Other
INR 50 INR 26
INR 0
2010 2011 2012 2013 2014 2015 2016
(F) (F) (F) (F) (F) (F)

Online Retail Does not include Travel, Prescription Drugs

Source: FORRESTER RESEARCH ONLINE RETAIL FORECAST, 2011 TO 2016 (APAC)


e-Commerce in India is in Early Stage of
Development

Net New online Buyers to drive growth

Growth Drivers – Online Retail
60%

50%

40%

30%

20%

10%

0%
2011 2012 (F) 2013 (F) 2014 (F) 2015 (F) 2016 (F)
Y-O-Y Growth - Online Buyers Y-O-Y Growth - Online Spending/Buyer

Source: FORRESTER RESEARCH ONLINE RETAIL FORECAST, 2011 TO 2016 (APAC)

Growth Drivers for E-Commerce

• Online Tenure
• Household Income
• Quality of Net Access
• Logistical Challenges
• Merchant Capitalization
• Merchant Push
• Payment Options


Why do Indian Consumers not buy online
I feel no need to buy products online

It's too complicated

Products will not be delivered in good condition

Delivery costs are too high

Think products will not be delivered at all

Don't want to give personal financial information

I prefer to research online & then buy in store

Don't want to wait for products to be delivered

I want to see and touch before I buy

I've heard about bad experiences with others

I don't have a credit or debit card

I don't want to register in order to make a purchase

I don't have convenient Internet access

I didn't know that you could buy products online

0% 5% 10% 15% 20% 25% 30% 35% 40%
Source: Asia Pacific Technographics Online Benchmark Survey, Q3 2012 (Australia, China, Hong Kong, India, Japan,
South Korea)

Indians are no more Price conscious
than other Buyers
% Agree with Statement
80%

70%

60%

50%

40%

30%

20%

10%

0%
I like to shop Price is more I would pay more
around before important to me for products
making a than brand names consistent with an
purchase image I like
India China South korea Hong Kong Japan Australia


The evolution of digital drives complexity
& Opportunity…

Internet Retailer Top 20 E-Comm Sites, US
Company Category Online Sales 2011
1 Amazon.com Inc. Mass Merchant $48,080,000,000
2 Staples Inc. Office Supplies $10,600,000,000
3 Apple Inc. Computers / Electronics $6,660,000,000
4 Walmart.com Mass Merchant $4,900,000,000
5 Dell Inc. Computers / Electronics $4,609,728,000
6 Office Depot Inc. Office Supplies $4,100,000,000
7 Liberty Interactive Corp. Mass Merchant $3,760,000,000
8 Sears Holdings Corp. Mass Merchant $3,604,288,201
9 Netflix Inc. Music / Videos $3,204,577,000
10 CDW Corp. Computers / Electronics $3,000,100,000
11 Best Buy Co. Computers / Electronics $2,950,000,000
12 OfficeMax Inc. Office Supplies $2,901,497,618
13 Newegg Inc. Computers / Electronics $2,700,000,000
14 Macy's Inc. Mass Merchant $2,246,375,040
15 W.W. Grainger Inc. Home Improvement $2,187,000,000
16 Sony Electronics Inc. Computers / Electronics $1,980,000,000
17 Costco Wholesale Corp. Mass Merchant $1,900,000,000
18 L.L. Bean Inc. Apparel / Accessories $1,716,502,219
19 Victoria's Secret Direct & Bath and Body Works Apparel / Accessories $1,630,000,000
20 J.C. Penney Co. Inc. Mass Merchant $1,590,000,000
http://www.internetretailer.com/top500/list/


Majority of U.S Retail Spending Influenced by
the Web

Resources Used to Research Before Making
a Purchase
% of Indian Online Researchers

In-Store

Friends & Family

TV

Newspaper

Magazine

Outdoor Advertising

Online Compared to the US only 9% of
Population Is Online in India
Radio

0% 20% 40% 60% 80% 100%
South Korea)

…and it changed peoples mind
% of Indian Online Researchers

No, I didn't change my mind

I didn't have a brand in mind

Yes, I changed my mind

Don't remember

0% 10% 20% 30% 40% 50% 60%

South Korea)

Content on Company Sites considered a trust
worthy source
Recommendation from Friends/Family

Consumer Written Reviews

Prefessionally Written Reviews

Information on Company Website

Newspaper Ads

TV Ads

Ads on Websites

Text Msg From Company/Brands

Ads on Radio

0% 20% 40% 60% 80% 100%

Do not trust Middle Trust
South Korea)

Embrace touch points to maximize ROI

consider

consum
e

become loyal

Thank You

Vikram Sehgal
vsehgal@forrester.com


Slide on Online Research in India
Qualitative slide on Key points for
Retailers to think about –
Does Online Cannibalize Offline?


Landscape of Internet Retail in India By Vikram Sehgal

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