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Evolution of e-Commerce in India: players, challenges, achievements

InGovern Research Services  has released a study  titled "Evolution of Ecommerce in India", to share insights and information on  the sector including the challenges faced, for major ecommerce brands like Amazon, Flipkart, Meesho, Jio Mart, Tata Neu, Myntra and Nykaa.  We bring you the full report
January 11, 2023: The Indian e-commerce industry has been driven by increasing mobile phone adoption. As of October 31, 2022, there are 1143* million mobile connections with 625 million urban and 518 million rural connections. (*TRAI data as of 31 Oct 2022 )
A few trends that are set to further increase mobile commerce:
- Launch and adoption of 5G network
-Launch and adoption of ONDC (open network for digital commerce)
-Quick commerce
-Hyperlocal delivery
The India e-commerce market size** is estimated to be $75 billion in 2022 and has the potential to expand to $111 billion by 2024 and $200 billion by 2026, with a CAGR of 20-22%. (** IBEF data of December 2022 )
The online retail market in India is estimated to be 25% of the total organized retail market and is expected to reach 37% by 2030
India’s social commerce gross merchandise value (GMV) is expected to reach $20 billion by 2026, with a potentially reach $70 billion by 2030
Amazon and Flipkart account for more than 60% of the Indian e-commerce market
For long a duopoly, there is now increasing competition from new entrants like Meesho, Nykaa, etc and Indian giants like the Tata group and Reliance group who are slowly increasing their presence in e-commerce.
The Indian e-commerce industry is controlled by stringent regulatory measures to prevent monopolistic and anti-competitive behaviour and control unfair trade practices.
Amazon
Amazon India has over 10 lakh sellers on its e-commerce platform. Amazon started in India in 2013 with 100 sellers and has grown to be the preferred online destination for sellers across India.
Amazon offers 168 million products to its Indian customers and over 4,000 products are sold on Amazon per minute.
The largest category on Amazon is the online smartphone channel with a 47% market share.
Amazon Retail India Private Limited, a subsidiary of the e-commerce global giant, reported its revenues for FY2021-22 as Rs 1,720 crore, an 8% year-on-year jump.
Amazon leads in core categories (consumer electronics, media) and has done well in Tier 1 cities with over 5 million Prime subscribers.
An Amazon Prime membership includes various bundled offerings, including free delivery (two-day, one-day and same-day delivery options), OTT streaming, shopping, music access and reading access on its site.
Amazon is one of the most trusted among the Internet brands in India, followed by Google and Facebook, according to a report by TRA Research in 2019.
Amazon India on 5th Feb 2022 said that the company has signed a memorandum of understanding (MoU) with Karnataka State Rural Livelihood Promotion Society (KSRLPS) to support the growth of women entrepreneurs.
Amazon has digitized businesses through programmes like Karigar and Saheli.
Amazon has also partnered with NSDC and participated in the National Apprenticeship Promotion Scheme (NAPS).
Challenges for Amazon
Amazon India is facing huge competition in fast growing categories, a weaker value proposition in quick commerce, limited traction in tier 2 and 3 cities, and an unfavourable regulatory environment for 100% foreign-owned retailing.
In year 2022, one of its main vendors, Cloudtail, discontinued operations.
Amazon are its sellers are facing increasing regulatory scrutiny many of which are as yet contentious.
Flipkart
The Flipkart Group includes digital commerce entities such as Flipkart, Myntra, Flipkart Wholesale, Flipkart Health+, Shopsy and Cleartrip.
Flipkart, a marketplace, hosts 4.2 lakh sellers on its platform.
Flipkart Group (Flipkart, Myntra, Shopsy) led the Diwali festive sale with around 62% share in terms of gross merchandise value (GMV) followed by Amazon with GMV of around 26%.
Flipkart plus, which is competition to Amazon prime, launched in 2018 and has free signups along with a loyalty programme which offers free delivery and early access to sales.
Flipkart leads in the apparel vertical, due to the acquisition of Myntra.
Flipkart also launched its social e-commerce platform, Shopsy app, to empower aspiring local entrepreneurs to set up their own online shop.
Walmart and Flipkart on 6th December announced the signing of a memorandum of understanding with the National Small Industries Corp. (NSIC) to jointly accelerate capacity building for micro, small and medium enterprises (MSMEs) across India.
Flipkart runs initiatives like Samarth and the EDGE initiative to bring MSMEs also onboard.
Flipkart has visibly scaled up its supply chain during the pandemic.
Challenges for Flipkart
The antitrust watchdog has plans to expedite a probe into allegations of anticompetitive behaviour by the leading e-commerce platform.
For Flipkart, 65% of its business is based on the convenience segment, which is why they have a dedicated logistics arm and warehouses, thus ensuring the fixed cost is high.
Problems faced:
-One of the top issues faced by consumers during festive sales, especially the Big Billion Days sale, is when their orders start getting cancelled for no appropriate reason. Netizens have brought up the issues on Twitter, where some have said that they are waiting for a refund while some have been refunded.
-Many small sellers on the Shopsy platform have complained about how in numerous sales they made on Flipkart, the due receivables - which is the final settlement amount that the e-commerce giant pays after deducting the commission, delivery fee and other charges – end up being negative. To make things worse, they often find out about this very late. One of the mostcommon issues faced by the sellers is unknown and delayed deductions to their accounts. These deductions are often unexplained and difficult to retrace to the order against which it was charged, the seller said. Even in cases where such deductions were linked to a particular order, they were so delayed that it turned reconciliation into an accounting nightmare. Experts found it puzzling as it was not common for e-commerce players to delay the deductions made to seller accounts.
Meesho
Meesho is a social commerce/ reseller platform.
Over 70% of customers come from Tier 2 and 3+ cities. These customers are generally price conscious by nature but want to buy quality products.
These resellers are usually housewives or fashion influencers who operate WhatsApp and Facebook groups, with hundreds of potential buyers looking for something to buy.
As of July 2021, social e-commerce start-ups have raised $554 million in funding, which is a 7x increase from the previous year and the highest ever since 2015
Moreover, Meesho has a zero-commission model, making it a no brainer for the suppliers in Tier-2 and Tier-3 towns to sell their products on the platform.
Challenges for Meesho
Meesho's average order value (AOV) is Rs 400-500 compared to average order value of likes of Flipkart and Amazon Rs. 2000-3000.
The distribution costs hit hard on Meesho financials. Acquiring & retaining the users who are price conscious needs constant burning of cash.
Inconsistent product quality – a consequence of Meesho’s social commerce model, where any merchant can set up their storefront on the platform, is that several sellers are selling what appear to be counterfeit goods.
There have been multiple reports of delayed deliveries from Meesho.
There have been multiple reports of poor customer service provided by Meesho. 
At times, the ordered product with 6 months warranty gets damaged within 10 days of delivery.
Meesho still depends on third party services to fulfil deliveries, while competing with Flipkart and Amazon, who have their own delivery services.
Recently the shift from reseller to direct model has led to a situation where majority of sellers feel cheated. This is very much against the selling point of the platform which showcased itself to empower sellers. But in mid-2021, the company suddenly switched tracks and decided to become an e-commerce platform by going to the customers directly, cannibalising the businesses of 15 million, mostly women resellers. Contrary to assertions on female empowerment, women resellers feel Meesho has robbed them of their livelihood, after offering sustained earnings for years. Today 75% of Meesho’s revenue is from direct selling.
The reasons for this were because Meesho’s army of resellers had no control over either the products or the supplier and they had no real experience or training in selling, which lead to poor servicing of orders, with mounting complaints from users.
JioMart
Starting off as an online grocery ordering service, JioMart now has upscaled and sells everything from electronics and beauty products to home decor and fashion items.
Unlike its major competitors - Flipkart and Amazon, which are marketplaces for third-party vendors, only a limited number of the sellers on JioMart are independent third parties. Instead, most listings on JioMart are from Reliance’s own brands, and deliveries are dispatched from the 15,000 Reliance Retail stores spread across India.
Today, JioMart fulfils 600,000 deliveries per day across 260 cities and towns in India.
It is believed to have gained significant traction in the Indian e-commerce market since its launch, particularly due to its strong partnerships with local merchants and its integration with Reliance Retail's extensive network of physical stores.
JioMart's success will also depend on its ability to effectively compete with other ecommerce players in the Indian market, such as Flipkart and Amazon. This will probably involve offering competitive pricing, a wide range of products, and a convenient and reliable shopping experience for customers
Tata Neu
Tata Neu is an app designed to offer customers an extensive yet highly personalised shopping experience. 
It is considered a ‘super app’, integrating Tata group’s trusted brands into a single platform like – ordering food on Qmin, groceries from Bigbasket, booking flights on AirAsia India and many more services.
It offers its users a wide degree of versatility and choice. Covering categories ranging from electronics and groceries, to travel and more, the range of products and services offered is second to none
However, Tata Neu has failed to gain any significant traction with consumers.
Vertical Ecommerce Sites
Myntra
Myntra, is the online fashion arm of Flipkart
According to Tofler, Myntra Designs reported a 46% jump in revenues for the financial year 2021-22 at Rs 3,610 crore.
At present, tier-2 markets contribute 40% to its sales especially during mega sale events.
"Shoppers from tier-2 and tier-3 cities are set to change India’s e-commerce landscape. These online savvy buyers accounted for over 61% of the overall market share in FY 2022, up from 53.8% in 2021," according to a joint report by Unicommerce and Wazir Advisors.
Some registered users of the fashion e-commerce site Myntra reported suspicious logins into their accounts, raising concerns of their data and payment information being exposed
The company is trying to reduce its losses due to frequent returns and exchange requests from customers due to wrong product sizes, Fabric Quality, or product colours.
Myntra chiefly caters to fast fashion which as a segment is under the scanner for sustainability issues.
Challenges for Myntra 
Operating revenue has increased by 46%, but so have expenses, resulting in Myntra still being a loss-making entity, despite being one of the foremost apps for fashion shopping. 
In spite of the overall 46% increase in revenues, the net loss widened 40% to Rs 597 crore.
Nykaa
Nykaa is a market leader in the online beauty and personal care market (BPC) operated by FSN E-Commerce Ventures. Online Beauty and Personal Care Markets in India have posted a CAGR of 60% over the last four years, grabbing a market share of about 8% in 2020.
Nykaa is engaged in the business of selling beauty, personal care and fashion products through its omnipresent channel.
They currently provide delivery services to approximately 90% of the available pin codes across India. Along with this, Nykaa also has 96 physical stores as of December 31, 2021, in 45 cities.
This segment is managed by an inventory-led model within which the company buys products directly from brands or their authorized distributors and sells them on its platforms. This ensures the authenticity of products sold and ensures timely delivery and availability of the product.
Nykaa also sells its brands manufactured through contract agreements on its channels. Private label brands fetch a higher margin for the company.
BPC products, especially cosmetics, have one of the highest average retail markups in the retail consumer product space. According to Crowe, the average retail markup on cosmetics in the USA is about 50 to 60%. This ensures room for margin expansion for Nykaa.
In 2018, Nykaa created a marketplace to sell apparel and accessories.
Nearly 80% of this segment follows the marketplace model. Under this model, the brands or their authorized distributors sell directly on Nykaa’s platform, and Nykaa receives a commission on products sold
Although the online penetration of the apparel market is low, it is a highly competitive market with deep pocket players like Myntra and Jio, thus making it difficult to scale this business. Nykaa hasn’t been able to achieve breakeven in this segment. Profitability remains a challenge in this segment since prominent players like Myntra is yet to achieve profitability.
Challenges for Nykaa
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Nykaa’s brick and mortar might be affecting margins as it is a capital-intensive business.