The eCommerce market in India is heating up as Japan’s Softbank attempts a merger between Flipkart and Snapdeal, two of the country’s largest eCommerce platforms. Softbank is in essence, a competitor to Flipkart, in that they own 35% of Jasper Infotech, the parent company of Snapdeal.
The Indian e-commerce sector has supposedly been poised for exponential growth for many years now, and while revenues have continued to increase, there has not been the same shift in critical mass, and the tipping point that has been experienced in the US and China. Softbank, having through its founder, Masayoshi Son, experienced significant success in investing in China’s e-commerce juggernaut Alibaba, was likely hoping to duplicate the same results with gaining an interest in India at around the same point in the growth curve. However, due to extreme cultural divergences across India, e-commerce platforms have grown almost exclusively on the back of the upper middle class who make up a small percentage of India’s vast population. Poverty remains the major barrier to growth, and while it is shrinking at an extraordinary rate – around 5% year-on-year since 2009, an extraordinary amount of the population is still living below the poverty line.
However, the speculative numbers being thrown around, values Snapdeal at around the billion dollar mark. The question that remains to be seen is whether Indian e-commerce has reached a point where it is commercially valuable and the short term, or whether it will be a long-term investment for patient practitioners.