Indian E-commerce Portals Brace for Amazon’s Challenge With $50 Million in Investments

Credit: Shehjar.com

With Amazon poised to enter the Indian market early next year, home grown e-commerce portals like Infibeam and uRead are reportedly preparing to raise capital to the tune of Rs 245 crores ($51.3 million) by the end of this year, according to a report from Business Standard.

Quoting officials privy to the development, the report stated that while Infibeam plans to raise Rs 180-225 crore ($37-47 million) to enhance its operating capabilities, uRead is hoping to raise Rs 20 crore ($4 million) to expand into other segments.

Explaining the need for funding, Infibeam’s vice-president (planning and strategy), Manu Midha said:

We have not raised any money to date, and now, we are looking to raise money from venture capital. The funds would be used to build operational capabilities. We want to raise at least Rs 100 crore ($21 million). We are open for more funding, but at the right valuation. We have already signed up with a partner to help us raise the money.

As we had noted earlier, investments in the Indian e-commerce space are definitely heating up, with companies like Flipkart, Infibeam, and Snapdeal vying to lead the e-commerce space in the country, before the online retail giant Amazon lands here.

NYTimes had in fact noted, in one of its recent articles, that venture capitalists had poured in Rs 8.7 billion ($183 million) into 20 e-commerce firms in the last year, compared to Rs 2.91 billion ($61 million) for 13 firms in 2009.

A similar report from ASSOCHAM suggests that the online retail industry is expected to be worth Rs 7,000 crore ($1.5 billion) by 2015. This growth will be driven by increasing Internet penetration across the country and easy availability of broadband services.

Keeping this in mind, I think it’s fairly safe to assume that e-commerce in India is still in its nascent stages.