Ecommerce market set to touch $20 billion in 2015

Going by the rate at which ecommerce in India is growing we suspect it drinks milk twice a day! By 2015, ecommerce market is slated to grow 37% and reach $20 billion from the current $11 billion. Quite clearly, this has been made possible by the increase in Internet users.

Motilal Oswal Securities, the research firm, attributed this growth partly to the increase in the internet population as well as to the increase in the value of per-shopper transactions. As of now, travel dominates the e-market with a 71% share, but going forward, e-tailing – especially fashion – would be the driving segment. Seems like e-tailing has some massive overtaking to do here, since it is currently at 16% of all market share.

This growth is also attributed to the incessant pumping in of money by marketplaces like Amazon, Flipkart and Snapdeal. Flipkart, who has raised $1.2 billion this year, is rumored to be on the lookout for $1.5 billion funding now. Two sources who didn’t wish to be named say that a mega fundraising round can be expected in January 2015, in which Flipkart would try to target only certain investors. Tiger Global Management, Accel Partners, Naspers, Iconiq Capital and DST Global are some of Flipkart’s investors. Tiger Global Management alone has invested $700 million in Flipkart, and is being rumored to be the most likely investor to pump in more money.

Funding is what keeps most marketplaces going, especially with the heavy discounts they offer from time to time. It costs Flipkart almost 70 crore rupees each month to continue with promotions. Sources say that the marketplace has set its sales target to $4 billion for the rest of 2014. The latest financing round which is likely to close in 45 days, could value Flipkart close to $11 billion. Further, new categories, such as furniture and packaged food, are likely to be introduced in the Flipkart menu.

Snapdeal, not too far behind, raised between $600 million to $650 million last month from existing investors, as well as Japan’s SoftBank. We’d like to see if this prompts other big players to go fund-raising as well!

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