Amazon India Entry Has Raised The Consolidation Pace In Ecom'

By siliconindia | Thursday, 17 July 2014, 09:23 Hrs

In May this year, marking the biggest consolidation in the e-commerce space in India, homegrown e-retailer Flipkart acquired online fashion retailer Myntra in an estimated Rs 2,000 crore deal.

Technopak said that investors have reaffirmed their faith in this sector by continuing to invest large amount of capital as a result of which an entirely new sector has emerged.

"Indian e-commerce has attracted a total funding of $1.6 billion across over 140 deals since 2012," the report said.

As of May 2014, the sector witnessed 20 deals worth $637 million compared to 60 deals worth $592 million in the entire 2013. In 2012 the sector saw investors pouring in $371 million for a total of 73 deals.

In the initial phases, investors were betting on a large number of players since all the players were small in size and the market leaders had not emerged, Technopak's report said.

However, as the market is moving towards an inflection point, leaders are emerging and, consequently, investors are getting more selective, it added.

While the number of deals in e-commerce has reduced from 73 in 2012 to 60 in 2013, the aggregate value of investment has increased substantially in the past year.

"Interestingly, no major Series A investments have been received in this period and funds have largely been drawn by mass market leaders and players leading within the specialty space," the report said.

Many smaller players struggled for sustenance due to the limited access to capital and high cost structures and were eventually forced to shut shop or get acquired, it added.

In May this year, homegrown online marketplace Snapdeal said it has raised $100 million (about Rs 590 crore) in a new round of funding from Temasek, BlackRock Inc, Myriad, Premji Invest and Tybourne.

During the same month, its rival Flipkart announced raising it has raised $210 million in a fresh round of funding, bringing the private equity firm DST Global on board as an investor.

Analysts say that such developments signify the growing thrust in the Indian e-commerce space towards consolidation with big online firms eyeing small start-ups and firms to expand their presence, reach as well as add specific categories to their portfolio.