Despite facing various challenges including shutdown of a few e-tailing firms, the size of the domestic e-commerce market, which stood at $28 billion in 2015-2016, is expected to see a 17.8% growth in 2017-18, thus reaching the $33-billion mark, according to data sourced from industry body Nasscom.
With valuations in the industry coming down, it has seen a sharp surge in funding activity. According to a report by Jefferies, during January-March quarter of CY17, private internet companies raised $2 billion, the second highest after Q3 of CY15. In CY16, these companies had raised only $2.7 billion.
The report noted that e-taling once again accounted for over 60% of the fund raised during the quarter as Flipkart, Paytm Mall and Delhivery did $100 million plus rounds. However, both Flipkart and Ola raised money at valuations lower than previous rounds which is likely to have helped them raise large rounds. In the aftermath of demonetisation, four fintech companies also raised $100 million during the quarter. The companies included Freecharge, Ccavenues, Trueblanace and Creditmantri.
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Money raised by internet companies dropped to a three-year low in the December quarter, with less than $300 million coming in. In fact, funds were hard to come by in 2016 and the $2.7 billion that was invested was 50% lower than the amount invested in 2015. For a perspective on how cautious investors have become, they had infused $2.6 billion in a single quarter in the three months to September 2015. Jefferies expects consolidation in the e-tailing industry. “With Alibaba and SAIF Partners infusing $200 million into Paytm Mall, reportedly at a valuation of over $1 billion, there are now at least five large players — Flipkart, Amazon, Snapdeal, ShopClues and Paytm Mall, we believe this makes consolidation inevitable in the segment,” it said in the report.