eBay increases stake in Snapdeal, invests $134 million

In other markets eBay’s investments have lead to buyouts further down the line. This is the second investment in Snapdeal that eBay have made. The first was made in 2013 of $50m. There may not be a third investment by eBay as it may be a outright buyout.

There are two major differences in the Indian market compared to developed nations:

1) In India and to other developing countries, cash on delivery is a preferred payment method rather than credit. In India 80% of Indian e-commerce tends to be Cash on Delivery.

2) Direct imports constitute a large component of online sales. Demand for international consumer products is growing much faster than in-country supply from authorised distributors and e-commerce offerings.

India is set to grow the fastest within the Asia-Pacific. India’s retail market is estimated at $470 billion in 2011 and is expected to grow to $675 Bn by 2016 and $850 Bn by 2020.

The penetration of e-commerce is low compared to markets like the United States and the United Kingdom but is growing at a much faster rate with a larger number of new entrants. The industry consensus is that growth is accelerating and thus confidence in the market place it at a all time high. This is reflected and eBay’s second investment in Snapdeal.