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Indian e-commerce to see 'disproportionate' growth

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 14 Aug 2012

Indian e-commerce to see 'disproportionate' growth

The e-commerce market attracted private equity and venture capital deals worth $410 million in the first half of 2012, driven by category leaders, with the sector likely to grow “disproportionately” in this manner going forward, says a report, The Asia Age reports.

According to audit, tax and advisory firm Grant Thornton, the total PE/VC deal value in the e-commerce space amounted to $410 million through 32 transactions in the first half of this year, wherein the average transaction size more than doubled as compared to the same period last year.

A large portion of the funding was taken by category leaders, with the top three transactions contributing around 62% of the deal value.

“The market will, in fact, grow disproportionately for the top two or three firms, while the rest simply may not be able to compete,” the Business Standard quotes the report as saying.

Meanwhile, “mortality rate” is increasing in the sector. In late 2011, Bangalore based e-commerce site Taggle.com discontinued its online products retail business. Taggle had raised funding commitments of $9.25 million as seed investment, the report said.

Others that have wounded up in the space include Nammagroceries.com, which has stopped its groceries initiative, Harisabzi.com and Subzimandi.in.

Interestingly, India, with nearly 125 million Internet users, is the third-largest country in terms of Internet population after China at 500 million and the US at 220 million, Zee News reveals.

Moreover, by 2014, India is expected to exceed the US in terms of Internet population. Almost all categories of the Internet are under-penetrated and will continue to see growth for the next decade.

“Premium will shift back on great teams with propensity to innovate, rather than the best search engine marketer,” Grant Thornton India client service director, Merger and Acquisition, Ram Kewalramani says.

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