Aided by proliferation of cheap smartphones and a burgeoning young population which is increasingly taking to convenience, the domestic e-commerce sector is sure making headway — from $16-17 billion in 2014, the market has currently grown close to $30 billion, according to analyst estimates.
However, it is nowhere near $100 billion as predicted by analysts five years ago. A 2016 KPMG report had estimated the e-commerce industry to touch $103 billion by 2020. To give perspective — e-tail comprises lion’s share of the total e-commerce sector but a mere 3% Indians shop online, according to a RedSeer Consulting report released last year.
Flipkart and Amazon that jointly hold close to 80% of the e-tail segment posted accumulated losses (the firms’ marketplace entities) of over Rs. 7,300 crore in the year to March 2019. Grofers which leads the online grocery space along with BigBasket reported losses of Rs. 448 crore in FY19 on revenues of a mere Rs. 70.14 crore.
In the fintech space, Paytm’s losses ballooned to nearly Rs. 4,000 crore in FY19 compared to losses of close to Rs. 1,500 crore in the year-ago period. SoftBank-backed Oyo’s valuation report revealed that its losses increased to Rs. 2,384.69 crore last financial year, against Rs. 360.43 crore in FY18. Cumulative losses of the companies (including BigBasket’s retail unit) stood at Rs. 14,450.4 crore in FY19.
In October, ShopClues announced its merger with Singapore-based e-commerce platform Qoo10. Founded in July 2011, the company had managed to raise only $255.9 million in funding. Nonetheless, investors do not mind pouring cash in a market, vast swathes of which remain untapped. The government’s move to withdraw high-currency notes in 2016 set the pitch for digital boom in the country.
The year 2018 saw one of the biggest deals in the e-commerce space — Walmart’s purchase of a controlling stake in Flipkart for a staggering $16 billion that valued the Bengaluru-based firm at $21 billion. Naspers led a $1-billion funding in Swiggy in December 2018, that valued the firm at an estimated $3.3 billion. SoftBank Vision Fund (SVF) infused $800 million into Oyo, leading its fresh $1-billion financing round.
In 2018, e-commerce and consumer internet companies raised over $7 billion in private equity/venture capital (PE/VC) (including venture debt), spread over close to 200 deals of which $5.9 billion comprised early stage capital while $1.3 billion was invested as expansion capital, according to a 2019 EY report. The B2C sector recorded 197 PE/VC investment deals during 2013-2018 amounting to $9.8 billion, the report showed. B2C sector accounts for almost a third of all investments in the e-commerce sector, analysts reckon.
Earlier this year, a $150-million cheque handed to BigBasket by Mirae Asset, CDC Group and existing backer Alibaba shot up its valuation to an estimated $2.3 billion, fetching it the status of a unicorn. Gurgaon-based logistics firm Delhivery was the other firm to turn unicorn after notching a $413-million funding led by SoftBank in March. In the ed-tech space, Byju’s saw its valuation swell to over $5 billion following $150-million funding led by Qatar Investment Authority (QIA) in July.
The pack, however, was led by Paytm that bagged the largest fundraise of the year — $1 billion from T. Rowe Price, along side existing backers SoftBank and Ant Financial, valuing the start-up at $16 billion. The Noida-based company added it up with another Rs. 4,724.42 crore in fresh funding led by Alipay.
Experts believe going ahead, ‘Bharat’ will fuel India’s e-commerce play. The number of internet users using local languages is expected to reach 536 million by 2021, exceeding the number of internet users using English, according to analysts.
Companies are pulling out all stops to woo Bharat — Flipkart has introduced an app in Hindi language and has added about 800 cities in the last two quarters to give adequate presentation to sellers from untapped areas like Kathua, Karimganj and Jharkhand. The company said number of transacting customers from tier-II cities and beyond have doubled over last year on the first day of its festive sale this year. Amazon said it saw the single-largest day of Prime membership sign-ups, with 66% Prime members coming from tier-II and -III cities.
Analysts at EY estimate the e-commerce sector to touch $200 billion by 2027.
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Source: Financial Express