Flipkart, Snapdeal Needs To Raise $20 B In 5 Years To Sustain Growth [Report]

India to become the second-largest digital market in the world, after China, with the e-commerce segment is expected to account for 2.5% of the country’s GDP by 2030. According to the Goldman Sachs report the ecommerce industry is estimated to grow 15 times more reaching $300 billion.
Flipkart-Snapdeal logosThe report also suggests that the ecommerce giants like Flipkart and Snapdeal will have to collectively raise another $20 billion (INR 1.27 lakh crores) during the next five years to maintain the growth rate.
Considering the current scenario where investors are flooded over the e-retailers, raising funds will not be hard. It is estimated that these ecommerce will have to continue achieving top line momentum of more than 100% growth even as profits elude.
The report also indicates that the Indian Internet ecosystem will leapfrog traditional tech themes and embrace new disruptive technologies with greater ease.
Further, the domestic online retail industry is evolving into a hyperlocal, on-demand market. Unlike the strategies of Flipkart and Snapdeal, new startups are partnering with local merchants to deliver faster, along with accelerated delivery times becoming a key winning factor for online retailers.
The reports also point out that the traditional Internet companies are also following the plans to get into hyperlocal on-demand market. A major segment of the investments into e-commerce firms are channeled into acquiring new customers by offering discounts and investing in marketing and improving logistics.
To add more, the report identified e-retailing, online travel, digital advertising market and electronic payments as segments that could “potentially catalyse domestic companies into multi-billion dollar businesses. The payment landscape is also evolving fast with the launch of digital wallets and payment banks, despite 60 per cent of e-commerce transactions in cash-on-delivery mode.
The report also suggests that Over USD 6 billion of private funding has come to India in 2014 and significant funds are still waiting, implying a potent eco-system is in place.
According to Morgan Stanley, Flipkart attracted $5 billion in 2014 alone, from investors including Japan’s SoftBank Corp and the Qatar Investment Authority. This has eased the pressure on firms like Flipkart to go public. However, the Cheif Financial Officer at Flipkart, Sanjay Baweja, said that the company has enough money to last it three to four years if it maintained the same rate of investment.
Recommended Read: Internet Enabled Smartphones In India To Reach 435 Million; App Downloads 9 Bn By 2019 [Report]

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