e-Commerce to see The Next Big Wave of Investments

By Rama Bethmangalkar, Principal, Ventureast
Thursday, February 26, 2015
By Rama Bethmangalkar, Principal, Ventureast
Ventureast is one of India's longest-standing venture capital institutions and has enabled over 80 seed, early and growth stage businesses in a broad array of sectors including technology, life sciences and clean environment.

The Indian retail industry is gearing up for the ultimate showdown in e-Commerce biz! The Flipkart-Amazon-Snapdeal stand-off is going to be a particularly captivating one to watch, with the competitive tension building up.

The blistering growth of Indian e-Commerce has followed a rather unconventional tradeoff - incur and withstand large losses for scaling as fast as one can. The latest development being the whopping $3 billion pumped into the market in separate investments by rivals Amazon and Flipkart. The interesting fact about this investment is that the current market size for e-Commerce in India is roughly worth only $3 billion. This is a clear evidence of the broad consensus on e-Commerce fundamentally reshaping the Indian retail industry.

With this sort of competitive tension building up, the question that we ask ourselves constantly is where the Indian e-Commerce market is headed. But more interestingly, what does it all mean for the next wave of investments in e-Commerce sector? Support services for e-Commerce are set to become the next hot sector. Delhivery, which offers plug-n-play e-Commerce technology and logistics service, has already raised two rounds of funding. Another significant transaction in the space has been the acquisition of Clinknow, a loyalty management platform for online transactions.

There are two very clear trends in the market which we feel would offer big opportunities for the next phase of innovation – the unsustainability of Cash-on-Delivery model and growing percentage of transactions taking place on mobile. Firstly, as the e-Commerce market grows, the security implications with handling the cash and the reverse logistics for returned goods will raise immense challenges. The solution to this dilemma lies in adapting one of the existing payment modes, which the customer is familiar with. Similarly, the number of mobile internet users in India is currently at 155 million and growing annually at 20+ percent. Also, most of these mobile users are coming from India's smaller towns - touching 32 million by June 2014. The very nature of mobile experience offers immense chances for personalization and growing the e-Commerce pie. Some of the e-Commerce giants already have mobile capturing more than 40 percent of their overall transactions. Two companies from Ventureast portfolio (Onemi – which enables shoppers purchase goods online on EMI, Loyalty Rewardz – India's largest loyalty management platform expanding into mobile) are working on these two big trends and will make key breakthroughs in the near future.

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