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Over $40 Million raised by e-commerce industry in May alone
By siliconindia
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Bangalore: With more than $40 million fund raised by e-commerce industry just in the month of May, shows the opportunity the industry holds. MakeMyTrip.com, Exclusively.in, mydala.com, RedBus.in, 99labels.com, ThePrivateSales.com, are some of the e-commerce industries which have succeeded in raising fund to expand their business and strengthen their sales. Exclusively.in raised $16 million in series B funding, just six months after it raised its first round of funding of $2.8 million. RedBus.in raised $6 million in series C funding. The figures are enough to validate the increasing e-commerce trend in India and the interest that VCs hold towards this industry.
A report by the Internet and Mobile Association of India has revealed that India's ecommerce market is growing at an average rate of 70 percent annually and has grown over 500 percent since 2007. It is estimated that ecommerce market will reach a whopping $10 billion by the end of 2011. "With a phenomenal opportunity in the field, VCs find a lot of scope still unearthed. The consumer have become tech savvy and are inclining more towards online purchase due to their busy schedule, which provides an opportunity for expansion," says Ashwin Raguraman, Vice President, IKP Investment Management Company.
The highly literate population of urban India, the increasing literacy rate of rural India and the expanding base of internet use in rural and urban India has contribution towards the current inflating market of ecommerce. Internet has grown to become one of the fastest growing communication medium and made ecommerce a new buzzword over the last decade. The third generation mobile services will be the icing on the cake for ecommerce market. "The consumption culture of Indian consumers has changed dramatically in last few years. The access to internet has provided them power to reach such goods and services they cannot find in the domestic or national market. This will provide a runway for the industry to take off," says Rajesh, Managing Partner, Ojas.
With special online consumer segment always prevalent since long, we can see a new trend of group buying emerging. These sites provide a platform for consumers to get best deals at a single place. "Providing consumer preference goods are one of the basic needs that we foresee in any e-commerce business before funding, including the duration in which they acquire their second customer. Logistics are another important factor to be taken into consideration along with the return rate of the company," says Alok Mittal, Managing Director, Cannan Partners.
The scalability of the idea, the model of business put forward by the entrepreneurs and the success rate of the company plays important role in attracting the interest of VCs towards funding them. "The online transaction security, pay pattern, social media, online advertisement, all is playing their part on the chess board to win the game. What is important is the move that you take, and being a VC, we look forward to it," says Raguraman.
There still lies a lot of scope for e-commerce to increase in the near future with the increasing consumption of internet in the Tier II and Tier III cities and rural areas of India. If the business can provide authenticity and raise confidence among the mass, it will provide a jerk of growth to the pendulum of e-commerce industry and the inflow of fund from VCs.
