eCommerce

Market Analysis

India
Russ Jones
Erin McCune
Glenbrook Partners

April 2011

TABLE OF CONTENTS
1.! FOREWORD .................................................................................................................. 5!
2.! EXECUTIVE SUMMARY ........................................................................................... 7!
2.1.! India in Context ........................................................................................................................................ 7!
2.2.! eCommerce Market Highlights ............................................................................................................. 7!

3.! INDIA ECOMMERCE PROFILE .............................................................................. 9!

3.1.! Local Economy ......................................................................................................................................... 9!

3.1.1.! Population, GDP, and Key Trends ............................................................................................................. 9!
3.1.2.! Currency ............................................................................................................................................................ 9!
3.2.! Internet Usage Characteristics ............................................................................................................. 9!
3.2.1.! Users, Connectivity, and Buyers ................................................................................................................. 9!
3.2.2.! Maturity of the Digital Environment ...................................................................................................... 12!
3.3.! eCommerce Market Size and Growth ................................................................................................12!
3.4.! Online Shopping Trends .......................................................................................................................13!
3.4.1.! eCommerce Segment Breakout .................................................................................................................. 13!
3.4.2.! Major eRetailing Categories....................................................................................................................... 13!
3.4.3.! U.S. Merchants in Country ......................................................................................................................... 14!
3.4.4.! Annual Online Spending Estimate ............................................................................................................ 14!
3.5.! Online Payment Preferences ................................................................................................................15!
3.5.1.! Purchase Style Preferences ......................................................................................................................... 15!
3.5.2.! Online Tender Type Preferences .............................................................................................................. 16!
3.6.! Other eCommerce Considerations......................................................................................................17!
3.6.1.! Average Ticket Size ...................................................................................................................................... 17!
3.6.2.! Risk and Fraud Characteristics .................................................................................................................. 17!
3.6.3.! Domicile Requirements................................................................................................................................ 18!
3.6.4.! Sales Tax Dynamics ..................................................................................................................................... 18!
3.6.5.! Expatriation of Funds .................................................................................................................................. 18!
3.6.6.! Domestic Payment Methods ...................................................................................................................... 19

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Glenbrook Partners LLC, 2010-2011

4.! ONLINE PAYMENTS ACCEPTANCE ANALYSIS ............................................ 20!

4.1.! Payment Acceptance in Context .........................................................................................................20!
4.2.! Tender Type Analysis ...........................................................................................................................23!
4.2.1.! Online Tender Type Mix ............................................................................................................................ 23!
4.2.2.! Online Card Acceptance Analysis ............................................................................................................. 24!
4.2.3.! Top Online Tender Types .......................................................................................................................... 24!
4.2.4.! Benchmarking Tender Type Acceptance by U.S. Merchants in India ............................................. 24!
4.3.! Infrastructure Analysis .........................................................................................................................25!
4.3.1.! Major Domestic Payment Processors and Gateways........................................................................... 25!
4.3.2.! Major Global Payment Processors and Gateways ................................................................................ 27!
4.3.3.! Availability of Other Solutions .................................................................................................................. 29!
4.4.! Major Financial Service Providers .....................................................................................................30!
4.4.1.! Top Domestic Banks .................................................................................................................................... 30!
4.4.2.! Top Merchant Acquirers and Processors ................................................................................................ 31!
5.1.! Tender Type Terminology ..................................................................................................................33!
5.1.1.! Payment Cards ............................................................................................................................................... 33!
5.1.2.! Bank Transfers............................................................................................................................................... 33!
5.1.3.! Direct Debit .................................................................................................................................................... 34!
5.1.4.! eMoney ............................................................................................................................................................ 35!
5.1.5.! Carrier Payments .......................................................................................................................................... 35!
5.1.6.! Cash on Delivery (COD) and Cash on Order (COO) ............................................................................ 35!
5.2.! Risk Management ..................................................................................................................................35!
5.2.1.! Address Verification Service ....................................................................................................................... 35!
5.2.2.! Card Verification Number ........................................................................................................................... 36!
5.2.3.! 3D Secure ........................................................................................................................................................ 36!
5.3.! eCommerce Market Tiers ....................................................................................................................36!
5.4.! EIU eReadiness Score ...........................................................................................................................37!

6.! ABOUT GLENBROOK .............................................................................................. 38!

6.1.! Firm Background ...................................................................................................................................38!

6.2.! Expertise and Experience .....................................................................................................................38!
6.3.! About the Analysts ................................................................................................................................39!
6.4.! Other Glenbrook Reports ....................................................................................................................40!

Glenbrook Partners LLC, 2010-2011

Table of Figures
Figure 1. Indian Internet Users that Shop Online, 2008 ...........................................................................10!
Figure 2. Indian Online Buyers vs. Asia Pacific Online Buyers, 2008 ....................................................11!
Figure 3: Indian eCommerce Market Size, 2010-2015 ..............................................................................12!
Figure 3: Indian eCommerce Segmentation, 2009......................................................................................13!
Figure 4: Top 5 eCommerce (B2C) Sites in India, 2009 ............................................................................14!
Figure 5. Presence of U.S. Merchants in India, 2009 .................................................................................14!
Figure 7. Consumer Online Payment Preferences in India, 2008 ............................................................16!
Figure 8. In-Country Tender Types Available in India, 2009 ..................................................................20!
Figure 9. Indian National Railway, Online Tender Type Mix, 2009 ......................................................23!
Figure 10. Tender Types Offered by U.S. and Domestic Merchants in India, 2010 ...........................24!
Figure 11: Top Banks in India, 2009 .............................................................................................................30!

Glenbrook Partners LLC, 2010-2011

1. Foreword
Glenbrooks eCommerce Market Analysis reports have been designed to help U.S. companies
better understand eCommerce markets around the worldwhy they might be attractive
expansion targets, what makes them unique, what payment options are necessary to reach the
broadest possible cross-section of online buyers, and what payment providers can help
companies enter the market.
Report Structure
Each report consists of two major sections. The first major section provides a quick snapshot of
the local eCommerce marketonline buyers, eCommerce market size and growth, average
online spending, infrastructure maturity, representative merchants (both domestic market
leaders and U.S. merchants that have entered the market), and other key attributes of the
market. Whenever possible we try to draw comparisons between the local market and the U.S.
market in order to best illustrate how each country is similar or different.
The first section also includes purchase style preferences (auction versus fixed-price format, use
of installment payments, handling of subscriptions, etc.), consumer payment method
preferences, risk management requirements, sales tax dynamics, and whether or not there are
rules governing expatriation of funds. The first section concludes with a description of unique
domestic payment methodswhat they are and how they work.
The second major section is all about online payment methodshow payment methods that are
familiar to U.S. eCommerce payment professionals map to local brands and payment systems in
an overseas market. This section also provides more detail on unique domestic tender types, and
assesses what payment method support is required to reach a critical mass of buyers. In doing
so, we attempt to use common terminology so that you can understand similarities between
markets independent of local payment syntax.
This section also provides a high level overview of major in-country payment service providers
and processors, and the ability of key regional and global PSPs to service the market. If there
are local risk management specialists, they are also identified. We also identify major banks that
play an important role in the local payments scene, and the major merchant acquirers in the
local market. The second section also includes a discussion of the options available for U.S.
merchants to connect into the local payment networks.
A third and final section provides helpful reference information on generic global tender types,
risk management techniques, and the categorization definitions Glenbrook developed for this
analysis.

Glenbrook Partners LLC, 2010-2011

Glenbrooks Methodology
In preparing this analysis, Glenbrook combined secondary research from multiple sources,
primary research with knowledgeable in-country payments experts familiar with the local
online payments acceptance market, and our best professional judgment to reconcile any
conflicts between multiple data sources and various subject matter experts. Where there were
multiple data sources, we include them and explain how we interpret the differing claims.
Because each country in this series of reports is at a different level with regards to eCommerce
market maturity, data availability (and reliability) varies greatly between countries. Some
countries have central processors that publicly report transaction data. Others have
governmental organizations that measure and track the eCommerce market. In some cases, we
had to piece the analysis together from unrelated data sources. Some markets are oblique and
less susceptible to external analysis.
To the greatest extent possible, we focus our analysis on online buyers and online payment
methods. Where this isnt possible, we highlight when a statistic or trend is across all channels
and not specific to eCommerce. Where data is available, we have further segmented the analysis
by vertical (e.g., online travel vs. online retail), buyer demographic, or market tier. If we do not
call out the specific breakout, assume the data and the analysis represents the local eCommerce
market, across all online verticals, and across all online buyers.

Glenbrook Partners LLC, 2010-2011

Glenbrooks eCommerce Market Analysis Reports

Audience
Payments stakeholders Merchants, social media sites, online retailers, online travel agents, online service
providers, digital content providers, online game providers, and virtual goods providers.
Payments professionals Payment service providers, gateway operators, payment processors, merchant
acquirers, alternative payment providers, mobile payment providers, virtual currency enablers, and risk
management providers.
Price
US$2,995 single report price; contact us for multi-report pricing. Price for each report includes one year
of ongoing updates if there are any revisions.
Place Your Order As Follows
1) Call us at +1.650.776.6886
2) Email us at info@glenbrook.com
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Glenbrook Partners LLC, PO Box 1304, Menlo Park, CA 94026 | www.glenbrook,com
Phone: +1.650.776.688 | Fax: +1.650.847.1569 | Email: info@glenbrook.com

6. About Glenbrook
6.1. Firm Background
Glenbrook Partners is a payments consulting firm with unique skills based upon years of
partner experience in hands-on operating roles in electronic payments. Glenbrook assists our
financial services, enterprise, and merchant clients with strategies, market and product/service
development for both the delivery and acceptance of electronic payments.
Through consulting, the firm focuses on strategy definition, product development, and the
application of technology to solve leading edge problems in the financial services industry. Our
consultants combine a unique range of skills and deep operating experience with razor-sharp
business focus, driving clients to leadership positions within their industries.
Through research, the firm offers value-added opinion, analysis, and insight into the pressing
issues of the financial services industry. Our analysts provide decision makers with
straightforward explanations of pressing industry issues, coupled with insightful, concise
recommendations for action. We offer a broad industry perspective that reflects opportunity,
urgency, competitive pressures, and the likelihood of success.
For more information, please visit our website at www.glenbrook.com.

6.2.

Expertise and Experience

Glenbrook has extensive experience helping our clients develop global payments capabilities. A
representative sample of recent client work includes:

Performed a multi-market
competitive analysis for a top
payment service provider.

Developed a strategy for cashless

delivery for a worldwide consumer
packaged goods provider.

Helped a major online music

retailer optimize its acceptance
strategy throughout Western
Europe.

Helped a online game provider

understand best practices in global
recurring billing, with an emphasis
on direct debit optimization.

Advised a major U.S. retailer on

acquiring and processing strategies
in the Asia-Pacific region.

Helped a Korean PSP in understand

country-specific payment norms
throughout the Asia-Pacific region.

Conducted a competitive analysis of

the virtual currency market for a
global online service provider.

Conducted a study for a major card

company in cross-border currency
handling best practices.

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38

Helped a large multinational

corporation develop an RFP for
global payment acceptance

Helped a large European bank

develop its global merchant
acquiring strategy.

Advised a major payments provider

on best practices in alternative
payments adoption.

Developed an eCommerce market

map for a top U.S. merchant
acquirer.

Developed a series of countryspecific distribution strategies for a

global service provider attempting
to enter the Latin America and
Middle East payments markets.

6.3.

About the Analysts

Russ Jones is a partner with Glenbrook, and has over 25 years of experience as an executive,
analyst, and consultant. Russ is an industry pioneer in the commercial use of Internet
technologies, and brings a strong background in payments industry analysis, strategy
development, and product conceptualization. At Glenbrook he currently works with clients on
all aspects of global payments strategy including international acceptance, alternative payments,
risk management, and digital identity.
Before joining Glenbrook, Russ was a general partner with The NuVantage Group, an
innovation-to-market consulting group, where his clients included CommerceNet and the
Financial Services Technology Consortium. Earlier, Russ served as director of emerging
technologies for Digital Equipments corporate research group in Palo Alto.
Erin McCune is a partner with Glenbrook, and has over twelve years of experience leading
increasingly complex business-to-business (B2B) payment initiatives for corporate clients and
advising financial institutions, enterprise/accounting software, and payments technology firms
on the development of their cash management capabilities. Her consulting practice also focuses
on the intersection of Web 2.0 and payments, work that increasingly involves assisting U.S.
merchants to understand the eCommerce environment overseas, particularly in developing
markets.
Erin's practice enables her corporate clients to reduce costs and increase working capital
through technology enhancements, electronic payment, increased ERP efficiency, and strategic
implementation of treasury management solutions. In addition, she helps financial institutions
and technology companies develop profitable treasury products that deliver effective results for
their corporate customers. Erin is the editor of Glenbrooks Payments Views blog, featuring
commentary and analysis of payments news.
Before joining Glenbrook, Erin was the founder of Forte Financial, a consulting firm focused on
corporate finance efficiency, accuracy, and technology. Erin holds a B.A. in English from the
University of California, Davis, and an MBA from the Marshall School of Business at the

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39

University of Southern California. She is Vice President of the Financial Women's Association
of San Francisco and past President of the San Francisco Treasury Management Association.

6.4.

Other Glenbrook Reports

eCommerce Market Analysis reports are available for the following markets:
EMEA Region

Poland, Russia, South Africa, Turkey,

Ukraine

Latin America Region

Argentina, Brazil, Mexico

Asia Pacific Region

China, India, South Korea

For the latest list of available eCommerce Market Analysis reports, see:
http://www.glenbrook.com/ecommerce_market_analysis.html
Glenbrook regularly develops market profiles for clients. Let us know what additional countries
you would like to see profiled, and Glenbrook will work with you to best meet your needs.
For more information, or to purchase additional reports, please contact Glenbrook at
+1.650.776.6886 or info@glenbrook.com

Glenbrook Partners, 2011. All rights reserved. All company and product names mentioned herein are the trademarks or
registered trademarks of their respective owners. Information in this research brief is based on best available resources. It is
distributed on an as-is basis, without warranty. While every precaution has been taken in the preparation of this report,
Glenbrook Partners shall have no liability to any person or entity with respect to any loss or damage caused or alleged to be
caused directly or indirectly by the advice or recommendations contained in this report. Opinions reflect judgment at the time
and are subject to change. All citations must be accurate, quoted verbatim, or duplicated without being manipulated, adapted,
paraphrased, or summarized. All citations must be sourced Glenbrook Partners, 2011.

Glenbrook Partners LLC, 2010-2011

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