Mumbai: As online shopping takes off in India, wholesalers and dealers have taken to selling on the new channel, becoming the largest group of vendors selling online.

Wholesalers or dealers account for 45% of the overall vendor base, outnumbering pure-play online sellers which constitute 35% of the total, said brokerage firm Jefferies India Pvt. Ltd in a report dated 12 March. The report was based on a survey of 50 online vendors.

Online portals like Flipkart, Snapdeal, Myntra and Amazon are marketplaces which have vendors selling through their platforms. The vendors include traditional retailers, wholesalers and dealers who typically sell their goods through brick and mortar stores, but are now selling online as well to reach a larger number of consumers.

For instance, for Flipkart, 30-40% of its vendors are pureplay online retailers, whereas 50% are traditional retailers now selling online, said Ankit Nagori, senior vice-president, Flipkart.

At Myntra, an online apparel and accessories portal, pure-play online retailers constitute 30-40% of the overall vendor base and the rest are traditional retailers that have a presence both online and offline, said a company spokesperson.

However, the contribution of pure-play online retailers to revenues is much less than the traditional retailers as they are smaller in size, said the Myntra spokesperson. The participation of traditional retailers and wholesalers differs across categories.

In electronics, the number of traditional retailers or wholesalers selling online is even higher at 60%. In case of apparel and accessories, though, the picture seems to be somewhat different with traditional retailers forming only a fifth of the vendor base. Moreover, the number of vendors selling online is also growing fast.

Snapdeal is approaching 100,000 vendors, and by the end of this calendar year, the company plans to grow its online seller base to 2,50,000 sellers and to one million sellers in three years, said a spokesperson.

At Flipkart, there are 30,000 vendors selling online, covering 1,000 cities across the country. By the end of the calendar year, the portal which sells everything from books to furniture online, will have 1,00,000 vendors, said Nagori.

A majority of the vendors online are present on multiple sites. Close to 62% vendors are selling across multiple sites, while 23% are selling on 2-3 sites and just 15% of vendors have restricted themselves to selling on just one site, said the Jefferies report. Retailers and brands are moving online due to the high growth seen across these channels, even though margins are comparatively lower.

“Volumes seem to be the key reason for selling online; nearly 75% reported better margins in offline sales compared to online," added the report.

However, high volumes make up for the decreased margins. Nearly 60% of the vendors indicated over 100% growth in online sales while another 20% indicated sales growth in the range of 30-100%, said the report. Snapdeal grew 600% from financial year (FY) 2013 to FY 2014, said the company.

Flipkart does not share its growth numbers. And Myntra expects a 300% growth in FY 2015 over the year-ago period, said the company spokesperson.

According to the report, accessories retailers, followed by apparel retailers, are seeing the highest growth rate in sales at close to 100%. Sales growth rate was lower for electronics at 50% and books at 20%, said the report. “We believe this is reflective of the stage of online penetration of the different categories —books were the first items to sell online in India and is relatively more mature; by contrast, online sales of apparel and accessories is still very new with many of the vendors selling online for less than 2 years," said the report.

Consumers outside of tier I cities are driving the growth of online retail in India. “Demand is strong from outside the tier I cities for 50% of the vendors," said the report. For Snapdeal, 70% of sales comes from outside of metro, said the company spokesperson. Likewise for Flipkart, which is seeing 50-60% of demand from outside of the metros. Tier I accounts for 45% of Myntra’s revenues, the remaining 55% coming from tier II, tier III and even tier IV.

“In recent times, we have witnessed an increased participation from non-metro cities. With increased Internet penetration and adoption of smartphones, Indians are shopping online more than ever," said Nagori.