We are looking into the seller side of things. There are a large variety of services like quality, which we can solve using technology. That is somewhere we will definitely invest, Sachin Bansal had told FE. We will also invest and experiment in the devices and private labels space, besides investing in a lot of categories like small appliances, tablets, accessories, Binny added.
Last week Amazon appointed Abhijeet Muzumdar as head of its corporate development and private investments, sources said.
Muzumdar was earlier vice-president of Bessemer Venture Partners, an investor in Snapdeal. One person privy to the development said the move underpins Amazons intention to outrun Flipkart. Besides, Amazon will also form a joint venture with Infosys co-founder Narayana Murthys Catamaran Ventures to help offline sellers and SMBs sell their products online.
We are investing in enhancing the experience and the mobile platform. Our mobile traffic has increased to 25% in 12 months. Our mission and strategy is exactly the same as we have everywhere else, said Amit Agarwal vice-president and country manager, Amazon India
Not to be left behind, Snapdeal, Flipkarts nearest domestic rival with over 30,000 sellers on its marketplace, appointed Abhishek Kumar its head of corporate development last week. Kumar will be responsible for mergers and acquisitions and future investments by the company. While Flipkart had recently acquired fashion e-tailer Myntra for $370 million to cement its position in the high-margin fashion space, Snapdeal had acquired Doozton.com, an online product discovery platform focused on fashion and lifestyle.
Industry watchers say pressure will be on Snapdeal to raise more funds and scale up operations. So far, Snapdeal has raised $410 million, one-fourth of Flipkarts $1.75 billion. Snapdeal has two options raise funds or go for an IPO. Its likely that Snapdeal will look to raise one more round before going in for an IPO. But, they may have a hard time raising a large amount. I assume they will look at anything between $300-500 million. Otherwise, they will find it hard to compete with Flipkart and Amazon, said Ashish Jhalani, founder of eTailing India.
Niche e-tailers, however, are unfazed. They see hope in the renewed interest of investors in the countrys evolving e-commerce space, given that the flush of funds is likely to shape up the e-commerce ecosystem by bringing about new innovations in supply chain and technology, besides boosting consumer interest in the sector.
Earlier, a $100-200 million investment was considered big, but now its $2 billion. This kind of money will help evolve the overall infrastructure for e-commerce, supply chain, marketing, branding and technology, Praveen Sinha, co-founder and managing director, Jabong, told FE.
In 2012, private equity and venture capital investments in the countrys e-commerce sector stood at $311 million, which rose to $553 million in 2013 and $1.8 billion this year. Of this years investments, Flipkart accounted for $1.2 billion and Snapdeal raised $234 million. On the contrary, niche e-tailers have managed to raise only $182 million in 2014, according to PE investment tracking firm Venture Intelligence.
Given that the domestic e-commerce market is slated to grow from the present $3.1 billion to $20 billion in the next five years, there will be ample scope for niche e-tailers who offer customers a differentiated shopping experience to exist. However, marketplaces will inadvertently continue to rule the roost.
Its a tricky situation. We have to compete with general merchandisers. But the ecology is scaling up, there will scope for niche e-tailers to do well, added Sinha.
An industry observer not wanting to be identified said bigger players are likely to spend much of the money in acquiring customers through incentives like bigger discounts, which will indirectly benefit niche businesses. Customer acquisition cost for the countrys top five e-tailers Flipkart, Snapdeal, Amazon, Myntra and Jabongis around R800, he said.
This is good news for niche e-tailers, agreed Rajiv Srivastava, COO and co-founder of Urban Ladder. Flipkart and Amazon have helped cultivate the online shopping behaviour among Indians. It certainly helps us because growth of the overall market ensures more customers are exposed to this medium and hence choose the online platform to shop, Srivastava told FE.