ARTICLE REVIEW ON HOW INCREASED FLOW OF FUNDS INJECTS NEW LIFE INTO INDIAS E-COMMERCE INDUSTRY

RASHTREEYA SIKSHANA SAMITHI TRUST

R V INSTITUTE OF MANAGEMENT

ARTICLE REVIEW ON HOW INCREASED FLOW OF FUNDS INJECTS NEW LIFE INTO INDIAS E-COMMERCE INDUSTRYArticle review

ARTICLE REVIEW ON HOW INCREASED FLOW OF FUNDS INJECTS NEW LIFE INTO INDIAS E-COMMERCE INDUSTRY

INTRODUTION: This article is describes on how the increase in fund flow in e-commerce and growth of the e-commerce in India. This article is extracted from http://articles.economictimes.indiatimes.com/2014-03-04/news/47895346_1_myntra-indian-ecommerce-mukesh-bansal Written by Radhika P Nair, Biswarup Gooptu & Harsimran Julka, The meaning of e-commerce is Electronic commerce, commonly known as e-commerce or e-commerce, is trading in products or services using computer networks, such as the Internet. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web for at least one part of the transaction's life cycle, although it may also use other technologies such as e-mail.In Indias ecommerce firms had been health freaks, they would have made the perfect before-and-after shot. From just a year ago, when they were huffing and puffing with the flab of company-owned inventory and the strain of high costs, they have now become almost fighting fit. And increased in fund flow helped them to reduce the cost and more efficiency.

Fund was serious issue in e- commerce in some period of time, it was do or die situation. Because there was problem to update regular inventory in industry due to the lack of fund.However they managed to raise the fund which brought them more investment and creating virtuous cycle. The multi category retailers founder Sachin Bansal, calls it the great validation Bansals company which expects to post sales to $1 billion by fiscal 2015 has raised over $560 million risk factors so far. In India online firms has received $840 million in funding since 2013. Such fundraising has allowed them to take on global leaders like Amazon and e bay etc.The sector is expected to raise $56 million by 2023. Amazon, which launched its Indian operations just six months ago, is counted among the country's top three retailers while eBay last week increased its holding in online marketplace Snap deal by investing about $133 million (Rs 824 crore). The bulk of the money in Indian ecommerce has gone to the toppers. Investors have realised that profitability is linked to scale in ecommerce.

Mukesh Bansal the co-founder of myntra (the fashion portal). Says that it has raised $50 million in last month in round led by billionaire Azim premji. Myntra aims to cross Rs 800 crore in sales this fiscal and turn profitable by the end of the year. Many of the ventures have invested heavily in technology to make their sites more efficient and enter new platforms such as mobile. Alongside customers, shopping through mobile devices now make up for up to a third of sales at online retail sites, up from 7% even a year ago. Experts said the gloom and doom until 2013 forced companies to rethink strategy. They began to look at bottom lines and not just the top line, said Ashish Jhalani, head of advisory firm eTailing India. This helped bring back investor confidence.Due the lack of investment in inventory. The Flipkart, for instance, changed its heavily capital-intensive inventory model in late-2012 into a hybrid model. Today, the company has over 1,000 merchants on its site. In May, it discontinued music downloads as it was not growing as much as expected. The second one is snap deal also targeted sales of $1 billion next fiscal and is aiming to be profitable in 2016, has converted its portal into a multi-lingual one and introduced tools like Safe Ship, a platform that automatically chooses the appropriate logistics provider for a seller of a particular shipment.

Enthused, investors are opening their wallets wider. The total amount invested since January 2013 is roughly the same as the total in the previous three years, according to financial advisory firm Allegro.

Category leaders who can demonstrate a path to such scale will continue to get funded, said Prashant Prakash, a partner in venture fund Accel Partners that has backed both Flipkart and Myntra.

Now the investors are looking forward to invest because of huge increase in development of e-commerce. Apart from Flipkart and Myntra, those in the thick of the fray are Snap deal, fashion portal Jabong as well as several single-category online retailers, such as lingerie firm Zivame and baby care venture Firstcry. Funding has also flowed into online services startups like restaurant guide Zomato and real estate portal Common Floor. gRight now there are no (clear) winners, these are the early leaders, said Prashant Tandon, cofounder of Healthkart, an online portal for wellness products which raised Rs 86 crore from Sequoia Capital and Intel Capital last year.

Investors made it quite clear that they were on the lookout for ventures with sustainable business. That became the mantra, and we are seeing the effects of that now. The revival has also meant that investors are willing to offer steep valuations. Unlike Japan or South Korea, we dont have multiple scaled assets.

That's why investors are ready to still pay a premium, said Ashish Kashyap, chief executive of Ibibo Group, which backed by its parent South Africa Naspers, acquired online ticketing portal redBus last year.

Flipkart received a valuation of $1.6 billion (Rs 9,880 crore) last year from growth stage investors like Dragoneer Investment Group, Morgan Stanley Investment Management and Sofina along with existing investors like Naspers, which backs Ibibo as well. Flipkart commanded about 30% premium, according to an investment banker who did not want to be identified.Zomato, which had revenue of Rs 11.5 crore in fiscal 2013, received a valuation of Rs 1,000 crore when it raised about Rs 225 crore last November from Sequoia Capital and Info Edge. Snap deals latest funding values the company at about $750 million (Rs 4,600 crore).4