On their path towards expansion, e-commerce players in India are looking out for mergers and acquisitions in order to expand their businesses. They always want to improve their cash-intensive sector by conglomerating with the apt technology and capability. And why not, the eCommerce Industry in India is still at the nascent stage and players have just scratched the surface. By the end of 2014, online retail sales in India had clocked at $5.3 billion – mere 0.7% of total offline retail sales. Despite the humongous growth, deep internet penetration, and hundreds – if not thousand – of M&As, the eCommerce Industry in India will only be able to eat 1.4% of total retail sales by 2018.
In the first half of 2015, 34 M&A deals took place in the industry. This is 3X than the number we recorded in the whole year of 2014. 11 deals alone that took place in 2015, valued of a total $776.25 million while four others were worth $324.35 million. That means 15 out of 34 acquisitions happened between January and July were worth more than $1 billion. Interestingly, all the 11 M&As that took place last year fetched a total valuation of mere $387.4 million. This is a clear indication of flourishing e-commerce startup scenario in India. Startups’ valuation has increased multi-folds in just one year and investors are ready to buy the startups at roaring valuation. For many this could lead to a question if the Indian startups ecosystem is highly overvalued and, are we heading towards another bubble bust? That is a different debate altogether and we have attempted the topic in a different well analysed article.
In 2014, we witnessed a successful wave of mergers and acquisitions happening in e-commerce industry in India. The industry was fortunate enough to keep the momentum in 2015 too. The major players of the industry, Flipkart and Snapdeal are looking forward to expanding in a way to improve the customer base and provide them with better user experiences. For that purpose, they always adopt the method of strategic acquisition.
The year of 2015 started with acquisitions especially the first 5 months. Can you believe that? Let’s have a look at the major acquisitions that happened this year. In addition, we shall find out their upcoming plans to prosper in their business.
Mahindra Acquired BabyOye
The Mahindra Group bought BabyOye, which is a leading brand of baby products sold online. The acquisition happened in February with an intention to incorporate Mom&Me, an offline baby care products store to online.
Flipkart Acquired WeHive Technologies Pvt. Ltd.
Flipkart acquired WeHive Technologies Pvt. Ltd. towards the beginning of this year. This reveals Flipkart’s intention to go for a mobile-focused business trend, which is happening right now. Obviously, this have helped them to get the grip of dominating in the market share of the mobile business.
Ola Cabs Bought TaxiForSure
The taxi market in India also had a tremendous growth in 2015. As the city traffic is increasing every day, the number of customers relying on taxi for their transportation has also improved largely. During the March of this year, we saw Ola Cabs acquiring TaxiForSure for $200million! This is quite a revolution in the taxi market. This acquisition has helped Ola as their demand was running out of supply.
Snapdeal Bought Freecharge
The biggest acquisition that the e-commerce industry in India has spotted so far was that of Snapdeal acquiring Freecharge. The latter one was acquired for nearly $400 million in a cash & stock deal. But this was not the only acquisition done by India’s largest m-commerce store SnapDeal. The company also acquired MartMobi to strengthen is market presence and offerings.
From all these acquisitions listed above it is clear that most of the companies are on the verge of improving their capabilities in the mobile business space by keeping their focus on becoming a market leader in the future. Flipkart extended their list of acquired companies by taking the possession of AdiQuity and Appiterate. Even niche marketers were high on demand. Foodpanda’s acquisition of JustEatIndia is an example of that and you should not forget the fact that it is not long back they acquired TastyKhana.
Another insight is that these recent years have opened up a new era for startups in the e-commerce sector. The online fashion industry has bloomed rapidly because of the ease and pace that e-commerce could offer it. According to Ashish Jhalani, founder of e-commerce advisory, knowledge and events firm of eTailing India, this trend would only be a short-termed one. He expects that this is going to end when private equity and venture capital funds go bullish.