Ebay eyes lead position in India's e-commerce space

Adopting a different strategy, American e-commerce company Ebay is steering

ahead in India’s e-commerce space. After entering India in 2005, the company is eyeing a bigger pie of the online retail market, estimated to be growing at 30 percent annually. Pursuing its aim, the company recently picked up undisclosed stake in Indian e-tailer Snapdeal at an investment of Rs 830 crores. In the previous round in 2013, Ebay had put in Rs 309 crore in Snapdeal.

With Flipkart having more than a third of the e-commerce share of the market, and another lead player Myntra receiving funding worth Rs 300 crores from PremjiInvest, Ebay is giving direct competition to established Indian players as well global giant Amazon. Meanwhile Amazon is lobbying for allowing foreign direct investment (FDI) in e-commerce has decided to race ahead. While Indian laws do not permit FDI in e-commerce, foreign investment in a marketplace model (hosting brands on a web platform) is allowed and Ebay is taking advantage of this law. Most of e-platforms have shifted to marketplace model of late in a bid to raise funds from global investors. While Snapdeal has been a marketplace company as well, Flipkart recently shifted from an inventory-led to a marketplace format.

Experts say, Snapdeal after the latest round of funding is now valued at Rs 4,500 crores. Ebay has globally made investments in e-commerce in South Korea, Germany, Britain and America, in different models. It has invested in Craiglist in the UK and Billsage, an online payment gateway based in Germany, which Ebay later acquired for an undisclosed amount. It recently acquired Braintree, a Chicago payments start-up for 800 million dollars (over Rs 4,900 crores) in cash, according The New York Times. It has also acquired Shutl, an online start-up promising one-hour delivery, in October for an undisclosed amount.

With the second round of funding in Snapdeal, speculations are rife about whether Ebay will finally end up acquiring Snapdeal, the way it has acquired e-businesses in other countries.