Indian ecommerce market to be split across Flipkart, Amazon and Reliance: Bernstein

The Indian ecommerce market is expected to become a three-player market like the US and China, with Flipkart, Amazon and Reliance Industries cornering around 90% of the share, up from 70% now, brokerage firm Bernstein said in a report.

The country’s ecommerce market is expected to hit $133 billion in size by 2025 against $72 billion in 2022, it said.

“Markets like India are still very early from an ecommerce penetration perspective…whereas markets like China (and) Korea have nearly doubled the penetration to between 27-30% of the population,” the report said.

“…but the growth of the ecommerce market should accelerate, led by Reliance, Amazon and Flipkart and the increasing share of Tier 2+ cities. Like other markets (US, China), we expect ecommerce share to consolidate with the top three players expected to have ~90% market share,” it said.

Currently, Walmart-owned Flipkart and Amazon dominate the Indian ecommerce space with around 60% share between them. Reliance is a distant third.

But Bernstein expects it to take advantage of the country’s leading retailer Reliance Retail’s retail and mobile network and Jio digital ecosystem to eventually take the top spot in the ecommerce market.

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“The advantages of its retail network, mobile network, digital ecosystem and ‘home field advantage’ in a famously complex regulatory and operating environment means in the long term, it will likely claim the lion’s share of the $150-billion-plus ecommerce marketplace,” the report said.Ecommerce companies in India are currently focusing on acquiring scale, building loyalty offerings, and expanding their total addressable market by going deeper into tier 2 and tier 3 markets, and increasing niche offerings in premium categories like beauty and personal care, it said.

In the new frontiers of smaller towns and cities, Reliance seems to have an edge, Bernstein said.

“Reliance is the only profitable business at 6-7% Ebitda while both Amazon & Flipkart are negative Ebitda,” it said. “Reliance Retail is deep in tier 2/3 markets with around 70% stores in those markets.”

In fashion, which is the biggest category constituting 25% of the overall industry’s gross merchandise value (GMV), Flipkart continues to dominate whereas Amazon has lost market share, Bernstein said.

Reliance’s Ajio reported more downloads and higher growth in monthly active users.

“Amazon has lost share in profitable categories like fashion,” the report said. “In fashion, Flipkart (including Myntra) is the dominant player with around 60% share while Amazon has about 20%. Ajio is growing strongly with around 15% share.”

Logistics and supply chain firm Delhivery cofounder and CEO Sahil Barua at its quarterly earnings call said Ajio had emerged as the fastest growing ecommerce platform in the last 12 months.

The Bernstein report comes amid a sluggish market for ecommerce after the pandemic.

ET had reported on May 11 that shopping across ecommerce platforms has been growing slower than anticipated, citing industry executives, multiple brands and third-party platforms tracking shipment and sales data.

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