E-commerce in India and Expected Turnover in 2014: Present Scenario in Online E-commerce Industry and The Future Ahead

With online shopping available in many cities and to some extent rural parts of India also, the e-commerce industry has been growing every year. The biggest players in the industry are Snapdeal, Myntra and Flipkart. Though the industry has become popular shopping platform for many online shoppers, it is far from making profit. Due to immense competition within the industry the companies are hardly able to reduce the losses and meet the break- even point for the business. Capital investors are falling back from investing and are worried about their invested funds. Due to this reason the investors are forcing the company to implement cost cutting methods and explore other revenue generating means.

The popular E-commerce websites in India, as on September 2013, are listed below based on alexa.com ranking (assuming higher ranking will be result of higher browsing activities).

Through the information gathered from Ministry of Corporate Affairs’ website, Myntra experienced sales of Rs. 212.4 crore with losses of Rs. 134.7 crore in fiscal year 2013. Flipkart reported losses of Rs. 281.7 crore for the same fiscal year. Even though the growth is slow and return on investment might take more time, the break-even point can be reached.  The parent company of snapdeal, Jasper Infotech reported loses of Rs. 120.1 crore for the same fiscal year.

Venture Intelligence firm, a financial research and analysis firm, did a research on private equity invested in E-commerce in online product retail. It was found that since 2011 over Rs. 7,450 crore (almost $1.2 billion) has been invested by equity investors. Flipkart is leading in the investors list with half of the amount, over Rs. 3,700 (over $600 million) raised by e-commerce investors. Accel Partners fund invested in online retail companies like Flipkart, Myntra, Bluestone and Zansaar.   There is market information that Investors are aiming for a break even on investment in 3-4 years unlike earlier time frame of 6-7 years.

As reported in Times of India, the e-commerce providers are expecting to touch break-even point soon and earn profits by the end of financial year 2014 (March, 2015). Snapdeal is expecting mobile ecommerce to improve and earn three-fourth of the income from this industry in next 24 months. They expect to earn gross merchandise value of Rs. 3,000 crore for financial year 2014.  Myntra is expecting to touch turnover of Rs. 800 crore in fiscal year 2014. Though selling fast-moving, low value apparel might have been advantageous to the company in terms of sales in lower margins, the company has decided not to sell them. Flipkart is aiming to reach higher sales target of about Rs. 6,200 crore ($1billion) in 2015. ShopClues retail company are targeting sales for Rs. 1,000 crore in fiscal 2015 by adopting economical digital marketing campaigns and encouraging card payments online, which has a higher rate of return than cash on delivery.