- STATUS AND SIZE OF INDIA’S E-COMMERCE ONLINE RETAIL INDUSTRY,TODAY
For India’s total population of 140 Billion, the overall size of Retail markets today stands at approx. $ 900 Billion in its turnover. It is projected to grow to the market size of $1.3-1.4 Trillion by year 2025-26, of which 75-80% share to be for the Food,Grocery, Apparel/fashion and lifestyle products. Yet this will equal only 15% share for online E-commerce, which is presently controlled by a Dozen mega players like Amazon, Flipkart.
Key factors to be understood for future E commerce trajectoryare mainly,
A] growth driven by ‘demographic’ dividend of India’s young well employed and earning population,
B] growth of millions of ‘mom and pop’ small residential area shops now evolving to Online selling,
C] growth coming in from faster spread of 4G ,WIFI and internet in semi urban and rural areas and
D] future growth in high speed data services from new emerging 5 G networks by end 2022-mid 23.
The battle for E-commerce Giants ,namely Amazon, Flipkart and the new online players esp. the Reliance retail and, the Tata groups.
In the hot bed of India’s e-commerce industry, there are `battles and wars ` going in for grabbing the increasing share of the Online e-commerce from the evergrowing retail market at 15% CARG with special targeting of `middle class consumers, The `youth` and fast emerging Tier 2.Tier 3 cities.
With its control on 4Gand future 5G networks, and its physical control on a million small to medium `brick and mortar` physical retail stores [ in only 3-5 km of populated residential areas].
Reliance Retail is fast emerging as the biggest player to be and hiving off big chunk of share of like of existing giant and mega E-commerce players like Amazon, Flipkart, DMart and Snap deal and others and, over whom It has the best advantage of up-cycling the 30% returns of E-commerce sales.
The ongoing battle of above giants is now on full roll for the lucrative E-commerce Market share The 2 other major Indian conglomerates like TATA and Birla groups are also spearheading their tentacles fast to carve out their own share in India’s mega e-commerce jungle. In this battle for market share, it seems that Amazon would be further losing its big pie under the new ONCD platform being launched with he Govt support for the small size online e-commerce business.
The concept behind the govt supported ONDC E-commerce platform to be understood as below:
A] the core objective and aim of new ONDC e-commerce platform is mainly to enable Online sale penetration of small sellers vis-a-vis the existing large players like Amazon, Flipkart, others.
B] to facilitate the above, the ONDC online platform will also provide embedded payment gateway.
Understanding the ONDC, open E-commerce platform to support small sellers.
At its core, ONDC is an open network for E-commerce underpinned by a set of open e commerce standards similar to India’s very successful UPI – Universal Payments Interface. In fact, the underlying open standards of ONDC are an adapted version of the Beckn Protocol, a global open source standard that can be used even beyond retail commerce for sectors such as mobility and health. Hospitality , and even education.
If it works with its best operational efficiency as expected, ONDC could fundamentally change the game for e-commerce, herald a future of open competition with less dominance by vertically integrated existing Mega platforms, and show U.S. regulators ways to take on their own monopolies.
An open E-commerce market for the future
ONDC is not an application, an intermediary, or a specific piece of software. Rather, ONDC is a set of specifications designed to foster open interchange and connections between shoppers, technology platforms, and retailers.
ONDC may provide a smooth entry for `mon and pop stores`called kiranas, but ultimately all players will benefit. Homegrown e-commerce competitors to giants Flipkart and Amazon, such as SnapDeal, who wish to compete on user experience and price on a level playing field, are signing up for ONDC. Google too has indicated interest. Indian technology companies that provide e-commerce services and capabilities to medium-sized businesses see ONDC as a potential boon to their biz.
RELIANCE RETAIL GAME PLAY TO CHALLENGE THE EXISTING DOMINANT PLAYERS
Reliance Group’s declared war and mega play into India’s $900 billion retail market has taken an aggressive mode as India’s Retail sector has now emerged as one of the most dynamic industries and is expected to reach anywhere between $1.3-$1.5 trillion by 2025-26. The organised retail along with its Online or e-commerce rider seen gaining 15% market share in the overall retail space, while food & grocery and apparel and lifestyle may account for 80% of India’s retail market by 2025.
Large market offers big opportunities. And it looks like Reliance Retail has seized it, with its massive omni-channel retail play of physical stores, B2B with kirana’s and e-commerce. With new Govt policy, for open access E-commerce channels,The overseas players like Amazon remain at handicap considering that they cant expand physical Stores to only 20% of their turnover and which would be far Yet far lagging behind Reliance Retail’s.
The company already went on an acquisition spree and partnerships in the last three years, adding to its portfolio some of biggest names, including Hamleys, Dunzo, Zivame.
It has also partnered with famous global retail chain 7-Eleven. Catering to India’s affluent consumers, Reliance, meanwhile, houses some of the most iconic brands such as Hamleys for toysand likes of Versace, Armani Exchange, GAP, GAS, Jimmy Choo, Michael Kors among others. The premium segment has become one of the fastest growing categories.
Also firming up its inorganic play, the company is planning to acquire dozens of niche local consumer brands to build a formidable consumer goods business to support its E-commerce.
Reliance Retails stays highly focused on growth via the physical retail expansion. Reliance is looking to cater to both price conscious and brand conscious customers, while trying to capture as much of the private consumption market as possible, it seems so.
Reliance Retail’s competitors are nowhere close to even match its physical store numbers. The company has over 15,000 offline stores across categories, compared with DMart’s 294 stores or Aditya Birla Fashion’s 3,468 outlets. Tata and others are yet far lagging behind.
As per the Bernstein study, the Reliance Retail’s revenue has grown five times in the last five years and the core retail revenue of $18 billion is greater than competitors combined.
As per Business Standard, Reliance wants the highest and not only a decent share of Indian consumers’ wallet. From that perspective, Reliance still has a long way to go… As consumer preferences evolve, Reliance too should adapt.
An undisputed leader in the domestic market, the aim of Reliance retail groups, is to become one of the top 10 retailers globally. Part of this bet is based on the premise that incomes and consumption power of Indians will increase across the board in coming years on back of its growing economy, one of the highest GDP and active employed population. However, could the uneven recovery that different segments of the population have seen stop the pie from growing larger and prove to be a dampener for all retail and e-commerce players….is yet to be seen.The Online retail pie is also being watched and aggressively chased by legacy competitors like the Tata Gr, Birla Gr .the ITC and existing D Mart and Snap-deal, and host of other regional and within State players.
The great retail-cum-E-commerce war for India’s consumption pie is surely onwith Reliance in lead as of yet.The E-commerce war is going to be uncontrollable especially With Reliance Gr control on 5G networks from next year and, penetration of its small physical stores into Rural India which is under major infrastructure change.
AUTHOR: MUNISH TYAGI
