2010 has been defining for the Indian e-commerce sector, which has (and some may sigh “finally”) come of age with much of the evolution being clearly visible this year. Though a fairly old industry in India, this sector has caught the fancy of investors and has generated multiple entrepreneurial avenues, riding on macro trends such as increase in broadband penetration, change in buying patterns and the success of group buying sites globally. So, what did we see this year?

Most significantly, travel site MakeMyTrip’s listing at the Nasdaq spurred the interest of many an investor as they saw a clear potential of a liquidation event. 2010 also nearly double of number of M&As (25) compared to 2009 (11), according to data compiled by our financial research platform VCCEdge. In this backdrop, VCCircle spots some key trends, including M&As and private equity fund-raising, in the e-commerce space in 2010 that will have a bearing on the way the industry evolves in 2011 and beyond.

Categories that are flying: Domestic entrepreneurs are raring to set up online stores mimicking global ecommerce sites. The top categories within e-commerce, investors say, are travel, classifieds, group buying, auto sales and luxury brands.

Travel, the big e-commerce story: The catalyst for e-commerce, one category which is largely responsible for making users more comfortable with online transactions is travel. Top players such as IRCTC,, and are witnessing a boom in online ticketing sales and are expanding their portfolio of services to add hotel booking and packages. Makemytrip India Pvt. Ltd. acquired online bus ticketing company from Mumbai-based Travis Internet Pvt. Ltd. in March 2010 and in August had a high profile listing on NASDAQ. In October, Yatra Online Pvt Ltd, the owners of, picked up a stake in Travel Services International Pvt Ltd, a wholesale ticket consolidator. B2B travel network Via and bus ticketing service are also making inroads and experimenting with new services.

Travel sites are also spending more online and spent a total of Rs 59 crore on display ads in fiscal 2010, according to the IAMAI.

Exclusive book retail not sustainable: Flipkart, which set out as book retailing portals, has spread out to cover other products as plain vanilla book selling is not sustainable business. “Books were a good hook to draw in users but on its own, book retailing online is not a scalable business. It will work online but can never become very big as the average book value in India is very low. That is why sites like Flipkart and Infibeam are expanding into other categories,” said Suvir Sujan, Partner, Nexus Venture Partners. The site also sells movie and music DVDs, games and consoles and mobile handsets. Infibeam has expanded similarly with used cars and bike classifieds.

Indians love discounts: Having received high valuations, deal sites and voucher-based ecommerce is the flavour of the year with domestic startups mimicking global sites, primarily “Indians like deals, so daily deal sites will continue to attract users,” says Rajan Anandan, an angel investor. Sites such as, and have established themselves and a slew of more daily, localised deal sites are cropping up such as DealMagic and Koovs. According to Harjiv Singh, who is exploring global markets with his rather than India, the Indian e-commerce space is not ready as yet for serious e-commerce players. He explains, “There are too many players right now in the industry and the customers are not sophisticated enough. India will be ready in 3-5 years and by then we will see only a few ones still standing - only those who build it up will get brand recall. In India, it will be a numbers game, with the ones who win getting the most number of merchants, deals and users.”

But we also like fashion: Today eBay acquired Germany’s fashion and lifestyle shopping site for $200 million, to foray into the hottest sector in ecommerce – high end luxury portals. In India, sites such as, and are competing in this segment. In November, Accel India Venture Fund and Helion Advisors Pvt. Ltd. invested $2.8 million in Exclusively.In, Inc. followed by Sequoia Capital infusing $8 million in Anandan warned that retailers tend to be laggards when it comes to technology – and this will prove to be an issue for e-commerce players.

Strategic shifts: General e-commerce has shifted from being a horizontal space to vertical and shopping sites such as Indiatimes Shopping and Rediff Shopping need a total makeover. On the other hand, many portals are expanding horizontally - take Yebhi for example. Bigshoebazaar was recently rebranded as Yebhi - it no longer is a shoe-only store and also sells accessories, bags and clothing.

Classifieds going strong: Jobs, real estate, matrimonial continue to see traction. Linkedin, Naukri and have top-recall followed by and by HT Media. Matrimonial sites such as Consim Info Pvt Ltd’s, and continue to reign. Naspers Ltd infused $40 million into the Nexus-backed OLX and in July, Mid-Day Infomedia Ltd. acquired SnatchKing Online Pvt. Ltd. In August, Naaptol Online received $7 million in venture capital funding from Canaan Advisors Pvt Ltd while Nexus India Capital Advisors Pvt Ltd invested $1.5 million in Magic Rooms Solutions, which offers an online hotel inventory distribution software.’s auto classifieds business was acquired by Axel Springer and India Today, and other websites such as eBay Motors,, Carazoo, Zigwheels and Automartindia are players in this space.


What is in store: Large e-commerce companies in India will need to spend heavily on infrastructure over the next three years to maintain momentum. Despite shipping delays, billing errors, poor user interfaces, checkout issues, the perception of online transactions not being secure and the continued lack of bandwidth, the mood of e-commerce players is one of optimism as they wait for 3G networks to roll out.

Competition and hype: Competition will continue to be heated and only few will survive. Shailendra Singh, MD of Sequoia Capital India says, “There is too much hype around e-commerce right now and many investors will lose their money investing in e-commerce because too many companies are trying to raise capital and we already see signs of very intense competition. In such an environment, market leaders have an unfair advantage because the whole industry will educate the market and drive adoption and the market leaders will get  disproportionate benefit from it. We believe the market leader in each category will generate the lion's share of value for shareholders.”

Consolidation, will it happen: Industry experts are unanimous in the view that consolidation is still a far cry in the nascent industry. Salwan said, there are no cash flows for the next 2-5 years and hence there will be no consolidation. We might not see the likes of Amazon taking over Quidsi, the operator of and for $500 million in the near future, but $100-$200 million deals can be expected to take place in the next two years, according to Anandan.

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