What binds Ambani, Birla, Tata, Mahindra? E-tail plans

Written By Unknown on Kamis, 14 Agustus 2014 | 21.03

Moneycontrol Bureau

India's tech czars Narayan Murthy (with investments in Amazon India, Yebhi) and Azim Premji (Myntra, Snapdeal) have already put in some of their billions in India's burgeoning ecommerce market but recently, the media is abuzz with reports of fellow tycoons Mukesh Ambani, Ratan Tata, Aditya Birla, Anand Mahindra and Kishore Biyani looking to carve their own ventures in the space.

Spurred by high growth thanks to rising Internet penetration and a fast-expanding middle class, the Indian ecommerce industry has seen investors pour in billions of dollars into various firms in recent times, but that may prove to be only the start of a wall of money willing to enter the sector.

Recently, the sector was in the news after Flipkart announced a USD 1 billion round of fund-raising followed by Amazon, which announced the very next day it would invest USD 2 billion in its Indian arm.

Indian e-commerce portals have increased their gross merchandise value, or the total value of goods sold, more than fivefold from USD 2.5 billion in 2009 to USD 16 billion in 2013.

This market is further expected to about double to USD 30 billion by year 2016, according to a report in The Hindu Business Line.

But it would still be a fraction of the GMV forecast for countries such as US, China and Japan, which are seen notching up sales of USD 545 billion, USD 439 billion and USD 143 billion, respectively.

Here are plans that the industry's tycoons are making to enter the online retail space:

- Mukesh Ambani's Reliance Retail, India's largest offline retail chain, is planning to enter ecommerce space, according to a recent report in The Economic Times.

By virtue of its Network18 acquisition, Reliance has also gained an existing footprint in this space thanks to the former's Homeshop18 property (Disclosure: Moneycontrol.com belongs to the Network18 Group).

-  Recently, there were reports that Tata Sons chairman-emeritus Ratan Tata was looking to invest in Snapdeal.com. The minority investment was reported as an exit by an existing investor rather than infusion of fresh equity.

"It's a huge market and certainly e-tailing is going to be the next hottest thing," Tata was quoted as saying.

- The USD 40-billion Aditya Birla Group will launch a project to identify opportunities in the ecommerce space, the Economic Times said in a recent report.

The conglomerate had appointed McKinsey veteran Prashant Gupta to explore the foray, the paper added.

- The Mahindra Group, which has a presence in the retail sector through a few offline specialty retail units, is looking at small steps to build its presence in the online retail market, Anand Mahindra told CNBC-TV18 recently.

The tycoon added that the conglomerate, which already runs websites for its retail units, will not pump in a lot of money into the space right out of the gate.

"Mahindra is not the kind of place where you go in and then you will raise billions of dollars and spend billions of dollars in advance of a business model being proven, that is who we are and I am upfront is saying that," he said.

- The pioneer of organized offline retailing in India is not too far behind. Future Group's Kishore Biyani plans to launch Big Bazaar Direct, which will launch all of Big Bazaar's products on an online platform by 2014.

"When brick-and-mortars combine their e-commerce strategy, the opportunities will be far more than pure-play online retailers," Biyani told the Economic Times recently.


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