eCommerce, a never ending attraction for investors

Funding has been rolling into the eCommerce market at a fast pace today. It is important to examine what is raising investors' interest in the online space and to look for investment that funds eRetail start-ups and growing organisations.
eCommerce, a never ending attraction for investors

Although businesses on eCommerce started out slowly, the last five years has seen it pick up lethal speed, both in terms of the variety of businesses opening up and the investments made in the sector. So, whether it is the eCommerce marketplaces like Flipkart, Jabong and Amazon or portals such as BigBasket, Myntra, Urbanladder and Bluestone, the big ticket investment is becoming all too exciting.

Major investments

The retail market is at its influx point today, with online retail posing as a threat and throwing challenges along the way. Talking about investments, the home-grown brand, Flipkart, raised $1 billion from Tiger Global Management and Naspers, while Amazon, invested double the amount in its Indian marketplace to keep pace with its much-talked about Indian counterpart.

Myntra, on one hand, secured about Rs.300 crore investment led by Premji Invest along with their existing investors Accel Partners and Tiger Global; BigBasket, the company becoming extremely popular as a veggie and grocery etailer secured $33 million from Helion Ventures, Ascent Capital, Zodius Capital and Lionrock Capital.

Furniture etailer, Urbanladder, too, raised $21 million Series B funding from Steadview Capital along with the existing investors, SAIF Partners and Kalaari Capital.

Other eCommerce players such as FirstCry, Fashionandyou, Pepperfry, Limeroad, Jabong, Snapdeal etc all have pulled off big ticket investments as well, helping the segment to consolidate in an unexpected way. While India is way behind China and US eCommerce markets, the wave of investment has to come with a reason.

Shailesh Vickram Singh, Executive Director, Seedfund Ventures, puts forth one of the reasons succinctly: “The online space is kind of disruptive, but I see it as something that is creating opportunity which was not there earlier. The supply chain was broken, so if you were in a small town, say Amethi, you were not getting the product you wanted there.”

The online is bridging that gap, which is also helping the retailers to buy those goods and sell them in those areas. The whole ecosystem is building in the way it is helping retailers to grow in areas where they were not able to reach. That is very interesting and attractive to the investors.

Seedfund Ventures has invested in close to 35 companies in India. RedBus, CarWale, MyDentist, Chumbak, Voonik, Dailyobjects etc are some of the prominent names.

According to eTailing India estimates, investors from around the world took note of the explosive growth potential of the Indian eCommerce industry, and committed a staggering $5 billion investment last year.

“What eCommerce has done is that it has exposed a lot of people to goods and products and services which only perhaps tier-I cities were looking at, now there is an aspiration and need build in the second-and-third tier cities, and that’s the growth and penetration where the actual opportunity lies,” says Padmaja Ruparel, President, Indian Angel Network.

Going further, with the increase in the awareness and usage of mobile wallet, will mobile commerce be the next logical step in the market? “The next retail market will be around the neighbourhood, that’s going to be a new commerce. It is going to be called the neighbourhood commerce,” concludes Vikram Upadhyaya, Chief Mentor, Accelerator Evangelist & Angel Investor, GHV Accelerator.

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