Warc, 29 August 2014
MUMBAI: The potential for online shopping in India has been underlined by two recent high-profile investments that indicate the level of confidence in this fast-growing sector.
Businessman Ratan Tata, Chairman Emeritus of Tata Sons and long-time chairman of the Tata Group until he stepped down in 2012, has taken a stake in Snapdeal, the online retail marketplace.
While the exact amount was not disclosed, the Economic Times reported co-founder Kunal Bahl's comments that it was "a validation of the journey we have had".
He said the company had grown 600% in the past two years and noted that "we have reached $1bn in sales at one-third the time that [rival] Flipkart took, spending a fraction of the money and with one-tenth the people".
Arvind Singhal, head of retail consultancy Technopak, observed that ecommerce was now a major deal in India. "Mr Tata's investment is a big endorsement, not just for the company Snapdeal but for the sector as a whole," he told the Financial Times.
Logistics business Deutsche Post DHL was able to put a figure on its investment – at least €100m over the next two years through its subsidiary Blue Dart Express, the Financial Times reported. It plans to build fulfilment centres and develop payment options as it aims to become the leader in e-commerce-related services.
The company predicted that retail sales per capita would grow to $1,265 in 2025 from $447 in 2010 and it anticipated that online retail volumes would grow at a 'medium' pace.
Chief executive Frank Appel said India was poised to move from a position where it had few telephone communications and limited fixed lines to one where many people had access to mobile communications.
He further expected the nation to "leapfrog as well from very small, very fragmented retail to ecommerce because there is no space, there are no malls… but there is, fortunately, increasing demand from India's rising middle class which wants to have products".
DHL research also found that one in three consumers shopping in India's online market are based abroad, mostly in the US and UK.
Data sourced from Economic Times, Financial Times; additional content by Warc staff