The listing of Alibaba on the New York Stock Exchange at a valuation of $231 billion has brought global focus to the e-commerce market. The e-commerce industry continues to evolve and experience high growth in both developed and developing markets. With the emergence of non-banking players in the payments industry and innovative vertical-specific startups, the Indian e-commerce market is expanding at a rapid pace. The digital commerce market in India has grown steadily from $4.4 billion in 2010 to $13.6 billion in 2014 while the global market is forecasted to reach $1.5 trillion in 2014. Increasing mobile and internet penetration, m-commerce sales, advanced shipping and payment options, exciting discounts, and the push into new international markets by e-businesses are the major drivers of this unprecedented growth.
The M&A deals (Softbank’s $627 million deal with Snapdeal, Flipkart acquiring Myntra for $370 million, Ola Cabs acquired TaxiForSure for $200 million) and sky-rocket valuation of these e-commerce giants rising last year show that the sector is heating up. The question would be whether these valuations are sustainable despite showing no signs of profitability. Global players like Amazon and Alibaba have deep pockets to rely on their parent companies for continuous funding support. The homegrown players would definitely need different metrics to preserve the investor confidence built in the sector.
