US-based eBay’s $133-million (₹650-crore) investment in online marketplace Snapdeal signals consolidation in the Indian e-commerce industry.
Other e-commerce players such as Flipkart, Jabong and Myntra had also raised funds from investors recently.
Analysts say India’s e-commerce segment will soon be dominated by only a handful of players such as Amazon, Flipkart and eBay. “Investors will continue to back e-retailers as they have attained mindshare and certain scale of business,” according to Farooq Oomerbhoy, Co-Founder & Principal, Orios Venture Partners.
Orios has invested in PrettySecrets, a company selling lingerie on the Internet.
The strategy is centred around Indian consumers, who are increasingly turning to e-tailers for shopping. It is summed up best by Manoj Gupta, CEO of Craftsvilla.com: “Today is the time to build the right foundation in e-commerce for future growth.” The $3.1 billion e-commerce market (excluding online travel industry) is expected to grow to $22 billion by 2018, which still is miniscule compared with China’s $200-billion industry, according to a CLSA report. Big investments will continue to go to large companies, said Ravindra Krishnappa, an investor with Indian Angels Network.
Added Oomerbhoy: “Big Indian e-retailers have invested in improving efficiency in the supply chain so that they can offer better delivery, which is a huge challenge for small companies.” So, what does this mean for small e-commerce companies? According to Krishnappa, while majority of them are struggling, the future would be around companies that are creating a niche for themselves in the vast e-commerce segment – from generic websites to specialised ones such as baby clothing or organic products.
Hot space Others feel companies that are aggregating information on various subjects and putting it up on websites – commonly referred to as aggregators – will also have huge growth opportunities. “With thousands of websites and millions of products being sold online, product discovery is a huge challenge that needs to be addressed,” said Harsh Gadia, co-founder of Klip.