Our last post was on the penetration of e-commerce and the proportion of retail sales contributed by e-commerce , across 5 countries. After reading it, one of our loyal readers asked us for some more information about e-commerce in India. Hence, this time we’re looking at the total value of e-commerce sales contributed by various categories of purchase / transaction.
The pie-chart above shows the proportion of e-commerce sales contributed by various categories in India :
(Data source: IAMAI IMRB Icube 2015 )
- In India, the total value of e-commerce transactions was a whopping Rs. 125, 732 cr in 2015, and it grew at 28% CAGR between 2012-15.
- That online travel drives a bulk of e-commerce revenue in India is a fact that anyone who reads a newspaper is aware of ; this chart adds the details – 61% of the total e-commerce revenue of Rs. 1.25 lakh crore was driven by online travel. Of this, domestic air tickets are the largest chunk, followed by railway tickets, and then international air tickets.
- While online travel grew at a CAGR of 30% over the three years from ’12 to ‘15, rail tickets (17% CAGR) and domestic ticketing (22% CAGR) are slowing down the growth
- What we typically call e-commerce and should more accurately be termed e-tailing – i.e. the purchase of various types of products online – is actually just 30% of the total value of e-commerce transactions.
- However, e-tailing grew at a CAGR of 80% from ’12 to ‘15
- The 3 categories within ‘e-tailing’ that are driving the growth are ‘Mobiles phones’ (126% CAGR),’consumer durables’ (135% CAGR) and ‘home furnishings’ (94% CAGR).
- The ‘Food delivery’ segment , albeit relatively small at just 1.4% of total e-commerce, also grew by leaps and bounds with an 89% CAGR from ’12 to ‘15.
Now that we’re familiar with the data for India, let’s compare the proportional split of e-commerce sales in India by category with that in the U.S. :
(Data source: IAMAI IMRB Icube 2015 ; eMarketer Apr 14 for US showing 2015 projection, validated through other sources )
- In e-tailing in India, there is an over-dependence on ‘computers, durables and consumer electronics’ as compared to the U.S. – almost 50% of total e-tailing in India vs. 22% in U.S.
- If we benchmark to U.S., most categories in India – e.g. ‘apparel’, ‘personal care’, ‘home furnishings’, ‘books’, ‘auto and parts’ – have the scope to grow faster than ‘computers, durables and electronics’. Of course, benchmarking to the U.S. is something that could led to wrong conclusions too, as so many e-commerce firms in the hyperlocal space have seen recently ; hence the need to tread carefully after investigating consumer needs, current satisfaction levels and the nature of the gap
- Interestingly, ‘Auto and components’ is something that hasn’t taken off in e-commerce in India at all, while in the U.S. it is 10% of e-commerce by value. The Indian online car market is limited to ‘second hand cars’ which is mostly a ‘classifieds’ business.
- Ravindra Ramavath
In Q4 ’15, India surpassed the US to become the #2 market in terms of Internet users behind China. However, e-commerce sales in India are nowhere near the value they generate in the U.S. or in China. So here’s a look at internet penetration, digital buyers and e-commerce sales of the top 5 countries by total retail Sales.
We’ve been interested in this topic for a few years now ; in this post almost two years ago we tried to gauge the penetration of e-commerce in four BRIC countries by comparing the proportion of their population that was active online vs. the proportion of population that actually shopped online. In today’s post, we’ve gone one step further and looked at the value of sales originating from those that shop online, i.e. the proportion of total retail sales value that is contributed through the e-commerce channel. For this purpose, the countries that we’ve chosen are those that are the top 5 in terms of total value of retail sales, namely USA, China, Japan, Germany and India, in decreasing order of sales value.
[Since there’s a lot of information in this infographic, here’s how to read it :
Each of these five countries is linked to two sets of concentric circles, one in the top half of the chart and one in the bottom half of the chart. The set of concentric circles on the top had population numbers and that at the bottom has sales figures. Now for the details.
Let’s consider India as an example. The outermost circle in the top set of concentric circles for India tells us that our country has 925 mn people aged 14 years or more. The circle inside it shows that of these 925 mn people, 221 million or 24% are internet users. The innermost circle shows that only 82 Mn – or 9% of the 925 mn people – are digital shoppers and make online purchases of goods and services other than travel and events.
The bottom circle linked to each country shows the total value of retail sales and the proportion that is conducted via e-commerce. For instance, total retail sales in India are estimated at 818 Bn USD, and that conducted over e-commerce is just 14 Bn USD, or 1.7% of the total.]
So in spite of all the hype around this channel and the huge spend on advertising by the e-commerce players, a mere 9 % of our population shops online, and these purchases account for only 1% of total retail sales. Why only 1% ? Either due to a lower frequency of shopping online vs. visiting a retail store and / or due to a lower value of goods being purchased online. The latter seems unlikely since a large proportion of online sales are for mobile phones and accessories, followed by apparel and footwear, so it must be the low frequency to blame. Two big obstacles for e-commerce to surmount are now clear – the low penetration of online shopping amongst internet users, and the low frequency of online shopping among those that do shop online.
On to our neighbour China. While 56% of their total population is online, over half of these make purchases online. No wonder that sales through the e-commerce channel are 15.9% of total retail sales in China, as the bottom circle shows.
Surprisingly, though the US has a far greater proportion of population that makes purchases online ( 65% of its total population buys through e-commerce), these account for only 7.1% of total retail sales. Wonder whether it’s the ugly frequency problem rearing its head again, or whether it’s due to low unit value of goods purchased.
- Ravindra Ramavath
Thanks to two readers of our blog, we have some more information related to our last post.
Click on this link to read about Geosmin, one of the molecules that plays a role in petrichor. In fact, its name is derived from the Greek words ‘Earth’ and ‘smell’. Another interesting point, the human nose is extremely sensitive to geosmin and is able to detect it at concentrations as low as 5 parts per trillion. Geosmin is responsible for the muddy smell in many freshwater fish ; Geosmin breaks down in acidic conditions and becomes odourless, hence vinegar and other acidic ingredients are often used in recipes to cook these fish. Thanks for all this info, Oinks.
And this link is about a fragrance called ‘mitti attar’ made in Kannauj, which captures that refreshing energising fresh smell of wet mud after the rain. Thanks for sharing this article, Ruks. This article that is quoted in the earlier one mentions one fascinating factoid , albeit unrelated to petrichor. Apparently after the Empress Mumtaz Mahal passed away, Shah Jehaan never wore perfume again , attars had been one of the couple’s shared passions.
As the monsoon advanced across South India, Wikipedia shared an apt factoid on twitter last week, ‘The smell of rain is “petrichor.” ’ The oxford dictionary defines petrichor as ‘a pleasant smell that frequently accompanies the first rain after a long period of warm, dry weather.’ No wonder most of us love that ‘fresh wet mud’ smell – it heralds an end to the sultry summer and the onset of cloudy breezy weather, but more about that in a bit.
The word petrichor is derived from a combination of the Greek words ‘petra’ meaning stone, and ‘ichor’, the fluid that flows in the veins of the Gods in Greek mythology. Petrichor was first described in a paper published in Nature journal in 1964 by Australian CSIRO scientists Isabel Joy Bear and Richard G. Thomas, and the process that gives rise to the fragrance we perceive is fascinating indeed.
During dry periods, plants exude an oil that retards seed germination and early plant growth, this oil is absorbed by clay – based soil and rocks (hence the words ‘petra’ and ‘ichor’). The smell itself comes about when increased humidity fills the pores of rocks, soil, etc. with tiny amounts of water. While it’s only a minuscule amount, it is enough to flush the oil from the stone and release petrichor into the air; this must be why we get that slight whiff of the rain smell before it actually starts raining. This process is further accelerated when actual rain arrives and makes contact with a porous surface; air from the pores forms small bubbles which float to the surface and release aerosols, such aerosols carry the scent and spread it. The article that I referred to for much of this information also has a super slow motion video released by scientists at MIT last year that helps explain this process.
So now you know it, Petrichor – that fresh fragrance that makes everyone’s spirits rise, is not the fragrance of the rain, neither is it that of wet mud, it’s actually due to an oil that’s released from the rocks or soil into the air just before the rain begins to fall. Did the description of the process in the last paragraph kill the romance of that fragrance for you, or make it even more interesting ? I hope it’s the latter, because more deconstruction follows – this time of why we find the smell of the rain so pleasant.
The reason petrichor makes our spirits rise may actually be hardwired into our memories, part of our collective consciousness – some scientists think it’s due to our species’ reliance on rain for a plentiful supply of plants and game animals throughout history. This article describes some evidence that may support this hypothesis. Anthropologist Diana Young of the University of Queensland in Australia, who studied the culture of Western Australia’s Pitjantjatjara people, has observed that they associate the smell of rain with the color green, hinting at the deep-seated link between a season’s first rain and the expectation of growth and associated game animals, both crucial for their diet.
So next time you draw in a deep breath of that fresh wet mud smell and feel invigorated, think of how that reaction connects you to your ancestors from centuries ago.
Next post : Now that we’ve serendipitously stumbled upon the topic of fragrance and the collective consciousness, we’re going to take this thread further – look out for more examples in our next post.
- Zenobia Driver
Read this article about the English Dost app via a friend’s Facebook feed and was reminded of a few incidents that I’ve witnessed during the last year.
On the day a friend left Mumbai for Singapore, among those who visited her house to say goodbye was her maid. The maid had brought her adolescent children along too, and I was amazed at the difference between the maid and her children. Had the mother not introduced me to her daughter, I’d never have guessed how closely they were related; the maid seemed like someone one step away from the ancestral village, while the daughter seemed a native of a big city.
While the mother wears a sari, cannot speak much English and is rather diffident, her daughter prefers jeans and a shirt, speaks good English and is much more confident. While the mother is uneducated, she’s ensured that her daughter got a school education and learnt English, and encourages her to attend college; even though the young girl has to hold down a part-time job in order to meet her education expenses at college ,she’s determined to obtain a college degree that will get her a better job than her mother’s and a brighter future.
A few months later, I was at Bodh Gaya for the sales and marketing module of a Cream training program. The participants comprised micro-entrepreneurs from villages in Gaya and Muzzaffarpur district of Bihar. They could speak some English, but not much ; hence classroom sessions were conducted in both English and Hindi, with constant translation of any English sentence by an interpreter. All our training material (slides , hand-outs, question papers) had also been translated into Hindi for the benefit of the participants. Yet we witnessed an amazing zeal to learn new English words that pertained to their businesses, as if they saw these words as currency for garnering status in the eyes of their peers (remember that these were all rural micro-entrep[reneurs). There were participants who’d stop us mid-sentence and ask us to spell out ‘negotiation’, ‘consumer’ etc. and earnestly write down the English word in their notebooks.
No wonder there’s such a huge market for English learning apps and so many of them available now. There’re generic apps like Busuu through which anyone can learn English ( or another of a set of languages) by having conversations with native speakers of that language. There’re English Dost and enguru, both of which use a game with real-life situations to help users learn English, these seem to target those joining the corporate sector in junior management roles. English Seekho by IMImobile and IL&FS Education & Technology Services limited target a very different audience – junior level clerks, traders, unskilled laborers, frontline staff, taxi drivers, restaurant waiters etc. There’s also the British Council site that has several English learning apps, podcasts etc., and even an app to help Taxi drivers learn English to communicate better with their customers ! Clearly there’s a ton of demand from a large number of segments.
- Zenobia Driver