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Big E-commerce deals stir up sector, support services

 
 

The Economic Times

New Delhi, 27 September 2014

Until the middle of this year, Noida-based website developer Manusis Technologies worked with about 50 clients a month. The number, the company says, has jumped tenfold since.

Two big deals in July changed the landscape for the nation's online retail industry, while also offering more business to providers of support services ranging from website development and payment services to logistics.

Flipkart in late July said it raised $1 billion in fresh funding, valuing India's top e-commerce company at $7 billion. A day after, Amazon, the global No.1, pledged $2 billion of investment in India. While these announcements reiterated the faith global investors have on ecommerce in India, they also led to a rush of investors and entrepreneurs to get a piece of the fastgrowing online retail market.

"We have seen a tremendous increase in the orders coming from the e-commerce industry," said Rajiv Kumar, founder of Manusis Technologies. "Today we are working on 500 clients every month and this has happened mostly after July and August."

The company has since July doubled staff count to 50 to meet new demand, and has rented additional office space.

A bulk of the new entrants into the e-commerce space is small entrepreneurs. One of them, Pooja Parikh, who launched her online jewellery business Azira jewels three months ago, says she wanted to do something of her own. "After the e-commerce giants raised such huge amounts of money, I got a boost and I took the plunge."

Online retail is still a tiny spot in India's retail market of about $500 billion a year, but is growing at a quick pace. A study by retail consultancy Technopak predicts India's e-tailing market will reach $32 billion by 2020 from $2.3 billion in 2014.

People want to sell all kinds of stuff online, says Ramesh Khemka, founder of Mumbaibased website developer Digi Shop. "Starting from plants to wall stickers to lamps, everything has buyers and seller in the virtual world." Digi Shop gets about 70 queries every month. Murali K of Eworld, a Chennai website developer, says he too has seen a jump in demand since July.

Ethnic Indian clothes and casual wear are favourite products but unusual products- such as pets - too are being offered online.

Payment gateway, PayU saw the number of its clients swelling 30% post-July to 11,500-odd merchants now. "Online buyers are increasing in numbers, who then want to buy more online which in turn leads to increased sellers," said Nitin Gupta, chief executive of PayU India.

Delhivery, which provides logistics services to the e-commerce industry, agrees. "Our clients have doubled since July of the previous year. And the queries for new business have doubled as compared to January this year," said co-founder Sahil Barua. The Gurgaonbased company recently raised $35 million to expand its network, fulfilment space and technology portfolio. Times Internet, part of The Times Group which publishes The Economic Times, is an investor in Delhivery.

Domain name registration is another area that has seen increased activity in recent times. BigRock, a company which helps businesses register their websites, however only partly credits the e-commerce sector for this. "While we have seen 10-15% growth in domain name registrations in July-August as compared to January-February this year, it would be difficult to attribute the growth entirely to the Flipkart and Amazon announcements," said Shashank Mehrotra, business head at BigRock.

Rajiv Sodhi, managing director and vice president of the local unit of Internet domain registrar and Web-hosting company GoDaddy, says ,"We only expect this to grow as a new generation of startups, entrepreneurs and e-commerce players build their businesses online."

With the huge growth that ecommerce has witnessed in recent times, analysts like Devangshu Dutta, chief executive of consultancy firm Third Eyesight, say there is scope for more players to come in.

But some also warn about the risks the space is fraught with, as only a few may have chances of making it big. They also see consolidation in the sector going forward.

(Published in The Economic Times.)

 
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