Investors decided to spend some of their funds for two major eCommerce companies in India today.
The number one eCommerce player Flipkart has raised $210 million in a fresh round of funding led by DST global with participation from Tiger Global, Naspers, and Iconiq Capital. Flipkart receives 3.5 million daily visits and has sold over $1 billion in goods to its 18 million registered users since it launched in 2007. The most funded startup out of India, Flipkart has raised $750 million to date and faces competition from companies like Amazon and Snapdeal in India’s rapidly growing eCommerce market.
Flipkart recently bought Fashion etailer Myntra for almost Rs.2000 crores/ $300 million.
Another eCommerce player Pepperfry raised $15mm funding led by investors Norwest Venture Partners and Bertelsmann.
Pepperfry.com is an online home and lifestyle shopping store in India selling products with cash on delivery facilities, started in 2011. Pepperfry has raised $28 million till date. Pepperfry is today India’s No. 1 online Furniture, Home and Living destination, offering products across categories like Furniture, Home Décor, Furnishings, Kitchen & Dining, Housekeeping, Fitness, Leisure and Pet Supplies.
Naspers who invested in Flipkart also owns the ibibo brand and recently acquired Redbus, India’s largest online bus ticket booking portal.
Tiger Global has invested in both Flipkart and Myntra and its said that they were one of the forces behind the merger of Flipkart and Myntra.
Pepperfry intends to use the funds for marketing, improving supply chain and expanding reach of last mile delivery. Bertelsmann India is the local investment arm of Germany’s media and services company Bertelsmann SE and Co. Bertelsmann has a business presence in book and magazine publishing, television and printing.
According to medianama reports Flipkart is planning to use these funds for the acquisitions.
The Indian eCommerce industry has seen investments in the last few months. Snapdeal, the direct competitor of Flipkart has raised $100 million led by investors Tybourne, Premji Invest, Myriad, BlackRock and Temasek Holdings. Earlier eBay has also invested in snapdeal which means eBay is looking at snapdeal as a possible option for merger. As direct FDI is not yet allowed in India, most of the foreign companies are looking at their shopping options.
Amazon has started aggressively in India which is giving sleepless nights to these etailers. As amazon is already sitting on a pile of cash and is the brain child of Jeff Bezos, they don’t need investor money to expand and take decisions.
Is it good for the industry?
Too much of investor involvement will pressurize the company and ultimately someone has to buy these loss making startups. Flipkart still sits on losses and more investor means the founders has less involvement in decision-making. This provides the edge for amazon.
The Indian eCommerce market is booming and the number of online users are also increasing which provides the much-needed boost for the sector. But too much of investors will do nothing good for the industry. We might also see China’s Alibaba entering India. They have raised enough through the largest IPO and might enter the Indian market soon.
If it happens the competition will be among Amazon and Alibaba which might see the smaller companies shutting their shops or merging with the bigger ones.
Lets hope for some good news and some great discounts for the consumers. Ultimately he is the one who decides which company needs to stay in the game!