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E-commerce set for escape velocity

E-commerce set for escape velocity

Aparna Dutt Sharma, Chief Executive Officer, IBEF

Jun 23, 2014 3:32 PM

Market developments and expert analysis indicate that the Indian e-commerce sector is poised for a phase of rapid growth in the coming years. The industry is projected to reach a turnover of US$ 75 billion by 2020 as compared to US$ 12 billion at present.

Research also indicates that the top ten e-commerce companies are expected to expand their workforce by at least 60,000 people in the year ending March 31, 2015 – the highest in a year for the industry so far. The data includes ancillary units, supply chain and logistics and temporary employees. Firms like Flipkart, Myntra and Snapdeal are expected to double their headcount this year.

E-commerce companies are looking at all possible sources for raising funds. Snapdeal, Flipkart, Yatra, Infibeam and Cleartrip are expected to take the stock market route in the next twelve to twenty four months. Due to the market potential and their intrinsic business proposition, some of the leading firms are already fetching attractive valuations from private investors. Snapdeal and Flipkart are at the forefront with current valuations at US$ 1 billion and US$ 2.6 billion respectively. Buoyed by its decision to launch its mobile app, online ticketing service BookMyShow recently raised INR 150 crore from global PE fund SAIF partners in a transaction that values it at INR 1,000 crore, nearly thrice its valuation from its previous funding round in 2012. In their recent funding rounds, online classified firm Quikr and restaurant search engine Zomato have also seen their valuations surpass the INR 1,000 crore figure.

This phase of growth is fuelled primarily by the rapid scaling up of operations across geographies and the advent of competition in the sector. Players are in the process of aggressively expanding their competitive capabilities to make the best of the opportunities ahead, as an increasing number of Indians are embracing the online shopping trend. Trends in the ecosystem certainly bode well for the players, who have weathered the tough initial phase and built a strong position for themselves in this sunrise sector.

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