Fwd: Blogpost #3

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Please find below the blogpost #3.

Tier-II India fuelling e-commerce: Accel Partners

 

BANGALORE: Facebook investor Accel Partners, the most prolific backer of the domestic e-commerce sector, said 56% of the country's online shoppers came from tier-II cities and towns, as lifestyle marketers board digital platforms to connect with the Middle India consumption story.

India's e-commerce, or more specifically e-tailing market, crossed $800 million with 13 million online shoppers in 2012, said a recent Accel Partners study presented to the investment community. The number of unique shoppers excluded the online travel agency (OTA) market, which, if included, takes the count of transacting internet users to little more than 20 million, added the US venture capitalist with shares in leading e-commerce engines like Flipkart, Myntra and Bookmyshow.

Women accounted for 21% of the online shoppers, almost doubling their share in the past one year, Accel said, adding that overall visitors to e-commerce stores rose 44%. Comscore data showed that the percentage of unique visitors to e-tailing sites grew 362% for apparel, followed by 119% for consumer goods and 98% for home furnishings in the one year period.

Middle India, defined as cities and towns with a population between one to ten lakh, has driven value growth for the fast moving consumer goods industry in recent past, Nielsen data showed. The rise of smaller towns has the potential to change the dynamics for India's fledgling e-commerce industry, in a stunning way, Accel figures suggested.

Reliance Brands, a unit of Mukesh Ambani-led Reliance Industries, which operates retail stores for several super premium international fashion names, has readied an e-commerce play starting with footer brand Steve Madden next month. "There's no denying the potential of e-commerce in a market like India with puddles of riches. Online platform fits well when you search for needles in a haystack since tapping them through physical stores alone is next to impossible," said Reliance Brands CEO Darshan Mehta.

Sport lifestyle retailer Puma too kicked off digital commerce just as many other global brands build local e-commerce engines.

India's Internet penetration stood at 8% with 137 million users, of which roughly 20 million were shoppers including OTA. This reflects China's online market back in 2005. The neighbouring dragon has 538 million Internet users and 227 million online shoppers now. "Almost 59% of the Indian online shoppers are below 25 years. Their numbers are set to raise with 22 million Facebook users in India aged between 18 to 22 years expected to join the workforce within five years," said Prashanth Prakash, partner at Accel Partners, which cut eight e-commerce deals in India until last year.

Still, the Accel analysis based on data from its investee companies tracks an abysmal year of investments when e-commerce start-ups struggled to raise big funding last year after netting $1 billion in 2011. The cluttering of me-too start-ups and fresh concerns over regulating foreign investments in the sector cooled the investor frenzy in the past 12 months.

Thank you

Ayush Tibrewala

12DCP-025