E Commerce Valuations Unrealistic Kusha
ARE E-COMMERCE VALUATIONS UNREALISTIC
There are expectations of a $100 billion firm in the e-commerce industry. The valuation bar has only been raised with every round of funding in e-commerce. A firm that is valued at $1bn in November 2013, reaches a valuation of $3bn within four months, it jumps to $7bn figure again four months after that? Nothing surprising there given the potential of the sector. But all this rush of money into the system, in a short span of time is what worries one. Investors like Temasek Holdings Pte. Ltd, BlackRock Inc., Government of Singapore Investment Corp., Steadview Capital Management LLc, etc. have made the valuations of a lot of firms in e-commerce to reach skyrocketing. Are these valuations really justified?
According to an estimate, the Rs 13,800-crore (or $2.3-billion approx.) Indian e-tailing market is expected to account for 3% of India's overall retail market and will touch Rs 1.92 lakh crore (or $32 billion) by 2020. This means that more investment will come into the country’s e-commerce business but what has surprised many is the eye-popping valuations that companies are enjoying in the span of a year.
In May, Flipkart acquired Myntra in a deal valued at around Rs 1,800-2,000-crore. Six months on, Amazon is speculated to be making its first acquisition in India, of fashion portal Jabong, at around 6000-7200 crore which is over three times the amount that Flipkart paid for Myntra. Flipkart is itself seeking its third round of funding of Rs 60,000 crore (or $10 billion), which will value Flipkart at more than $10billion after the funding. Interestingly, it isn't the marquee names alone but Niche players such as CBazaar (clothing), Pretty Secrets), HappilyUnmarried FashionandYou, FirstCry that are making the valuation cut in the e-commerce business.
In the coming years, we will see more such niche players growing at a staggering rate due to this.
Gathering all the relevant details of the companies, one will not be able to
There are expectations of a $100 billion firm in the e-commerce industry. The valuation bar has only been raised with every round of funding in e-commerce. A firm that is valued at $1bn in November 2013, reaches a valuation of $3bn within four months, it jumps to $7bn figure again four months after that? Nothing surprising there given the potential of the sector. But all this rush of money into the system, in a short span of time is what worries one. Investors like Temasek Holdings Pte. Ltd, BlackRock Inc., Government of Singapore Investment Corp., Steadview Capital Management LLc, etc. have made the valuations of a lot of firms in e-commerce to reach skyrocketing. Are these valuations really justified?
According to an estimate, the Rs 13,800-crore (or $2.3-billion approx.) Indian e-tailing market is expected to account for 3% of India's overall retail market and will touch Rs 1.92 lakh crore (or $32 billion) by 2020. This means that more investment will come into the country’s e-commerce business but what has surprised many is the eye-popping valuations that companies are enjoying in the span of a year.
In May, Flipkart acquired Myntra in a deal valued at around Rs 1,800-2,000-crore. Six months on, Amazon is speculated to be making its first acquisition in India, of fashion portal Jabong, at around 6000-7200 crore which is over three times the amount that Flipkart paid for Myntra. Flipkart is itself seeking its third round of funding of Rs 60,000 crore (or $10 billion), which will value Flipkart at more than $10billion after the funding. Interestingly, it isn't the marquee names alone but Niche players such as CBazaar (clothing), Pretty Secrets), HappilyUnmarried FashionandYou, FirstCry that are making the valuation cut in the e-commerce business.
In the coming years, we will see more such niche players growing at a staggering rate due to this.
Gathering all the relevant details of the companies, one will not be able to