India’s Ecommerce market thrived as the country becomes increasingly digitized. India has a smartphone penetration of 45%, and it is one the cheapest countries for mobile internet worldwide. India’s Ecommerce market was worth $60.5bn in 2020, having grown at a compound annual growth rate (CAGR) of 26.3% since 2016. The pandemic acted as a further catalyst, forcing a widespread shift to online shopping as consumers were placed under lockdown for several months in 2020 and 2021.
Ecommerce is also the most important theme among Indian start-ups. According to GlobalData’s deals database, there are currently over 100 of these start-ups in India. Of those, 16 are unicorns (privately-held companies valued at $1bn or more), and more are in line to join the unicorn club. These start-ups range from online grocery and food delivery to ride sharing, hotel booking, online retail, and logistics platforms.
Indian Ecommerce start-ups are setting new benchmarks
India’s growing Ecommerce market has strengthened the start-up ecosystem. Ecommerce start-ups are receiving significant funding, becoming unicorns, and ultimately going public.
Zomato, the food delivery start-up, successfully IPO’d in July 2021. It raised $1.3bn and was valued at $12.2bn. Its listing serves as a role model for the founders of other start-ups, and GlobalData expects more of them to go public on Indian exchanges in 2021. Two leading Ecommerce unicorns, Ola Cabs (ride sharing) and Delhivery (logistics platform provider), have raised significant amounts recently and have announced IPO plans, along with Nykaa, another unicorn. Paytm, primarily a digital payments player that has ventured into Ecommerce, has also filed for an IPO with a valuation of more than $25bn.
Investors are pouring funds into these unicorns. Swiggy raised in its latest funding round in July 2021 at a valuation of $5.5bn. The number of Ecommerce unicorns is also growing. Blackbuck (logistics platform provider), Grofers (online grocery), Urban Company, Meesho, and Infra.Market became unicorns in 2021. Cars 24, Nykaa, and Firstcry joined the club in 2020. There are more Ecommerce start-ups ready to join the unicorn party, including Dunzo, Ecom Express, and Cure Fit.
Expansion and investment
India’s Ecommerce unicorns have been expanding into new business lines and fresh geographical areas. For example, Swiggy has invested in multiple sectors such as food tech, AI apps, and video creation tools. Ecommerce entrepreneurs are chasing adjacent opportunities to unlock value. For example, Ola’s electric vehicle unit, Ola Electric, is also a unicorn.
These start-ups are also giving more importance to environmental, social, and corporate governance (ESG) goals. ESG actions are crucial as they will become competitive differentiators. Both, Zomato and Swiggy are increasing the number of electric vehicles in their delivery fleet, while Nykaa has set up a recycling system for all its packaging. Zomato is also setting an example on gender diversity. It not only has 50% female representation at board level, but it is also focussing heavily on increasing female participation in delivery services.
The future of Ecommerce start-ups in India looks bright. Over the next few years, there will be many more Indian Ecommerce unicorns and further successful IPOs.