E-commerce firms start to beat brick-n-mortar in segments

E-commerce will soon be larger than brick-and-mortar in India, and the trend has already started showing in pockets. That may look like a startling claim coming from an e-commerce company, but Flipkart chief executive officer (CEO) and co-founder Sachin Bansal believes that is true. The company, which recently hit the run rate of $1 billion in gross merchandise value ahead of the target date, is the largest mobile phone retailer in the country, counting online and offline stores, estimates show. Flipkart has confirmed that.

In books, too, e-commerce companies are clocking better numbers than offline stores, Bansal told Business Standard in an interaction. In fact, the latest Nielsen Book Scan Report pegs Flipkart’s book sales share at 45-50 per cent of the organised retail market. “No player, online or offline, can have a larger share of the market than that,” an industry expert pointed out.

“We should soon do the same in electronics,” said Bansal, without sharing the numbers. While Flipkart is a leading outlet for consumer electronics, other e-commerce players such as Snapdeal, Amazon and eBay have significant share of the electronics market, too. The growing popularity of electronics online had recently prompted companies such as Lenovo, Nikon and Toshiba to come out with advisories for buyers, warning them against purchases made through online retailers, who may not be authorised dealers.

While electronics is the largest category for Flipkart, it is betting big on apparel and fashion. “We are going to be leaders in the apparel space by the middle or end of the year,” said Flipkart’s Bansal. At present, fashion or apparel is the fastest growing segment for the company.

Mukesh Bansal, CEO and co-founder of Myntra, an e-commerce player dedicated to apparel and shoes, calls fashion the most attractive category in e-commerce. Myntra is recognised by investors as the number one player in the space, according to Mukesh, who was referring to the latest round of funding of $50 million. Fashion in India is estimated at $60 billion, including online and offline, and its set to grow to $100 billion in four years.

Also, among others, online player Koovs has shown the promise of fashion. Koovs listed on AIM on the London Stock Exchange riding on the growth story of online fashion. While Koovs wants to be like ASOS of the UK, Myntra has tried to model itself on the likes of ASOS and Zapos of America.

A report by retail consultancy Technopak put the market share of electronics at 30 per cent out of the total e-tailing universe. Books, music, stationery, furniture and kitchen accessories put together make up for 45 per cent of the online market, while the remaining 25 per cent is with apparel and lifestyle products. The report points out that online retail growth has followed a disruptive trajectory across geographies and that it may be the same in India, especially as the number of mobile internet users has seen much faster growth than broadband.

In terms of industry size, e-commerce is still small at $1.5 billion, out of the organised retail pie of $37 billion. The total retail market in India, most of which is unorganised, is pegged at around $500 billion. However, with 40 per cent of the e-commerce traffic coming from mobile phones, online retailers are hoping to compete hard with brick-and-mortar retailers.