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.
