Online e-commerce giant eBay (http://www.ebay.com) last week said (https://twitter.com/ebayinc/status/317311914579488768) that it expects to have 12% of its sales coming from BRIC countries by 2015 in an global e-commerce market that will be worth $300 billion (http://www.ebayinc.com/in_the_news/story/ebay-inc-expects-enable-300b-global-commerce), and here is one more step in that strategy: it is leading a $50 million, Series C investment in Snapdeal (http://www.snapdeal.com), an online marketplace in India with 20 million users. Existing backers Nexus Venture Partners (http://nexusvp.com), Bessemer Venture Partners (http://www.bvp.com) and IndoUS Venture Partners (http://www.iuvp.com) also participated.
The news was first reported by Indian tech blog NextBigWhat (http://www.nextbigwhat.com/ebay-invests-in-snapdeal-297/), and we have now confirmed the details with our own sources. Snapdeal's CEO and co-founder Kunal Bahl has declined to comment. It will make eBay a minority shareholder in the company, and this Series C investment means that Snapdeal has now raised about $102 million (http://www.crunchbase.com/company/snapdeal) in funding since 2010, with the previous two investments being $12 million in January 2011, and $40 million in September 2011 (http://techcrunch.com/y/y%20grew%20by%20abt%20400%25%20sales%20gross%20merchandise%20value).
We understand that Snapdeal was not actually looking for such a big round but when it went fundraising for its Series C, but the response was more enthusiastic than it had expected, perhaps owing to the company's currently-crazy growth, with sales growing year-on-year by abt 400% in terms of gross merchandise value. Among others that were interested was Amazon — another sign that it, too, wants to doing more in emerging markets going forward. We understand that part of the reason Snapdeal went with eBay was it was a pioneer in the marketplace business model and has been pushing hard on its international strategy.
The news will mean one further step into India for eBay: the company already has a full subsidiary in the country, eBay India (http://www.ebay.in), but that only has 5 million users. Ebay India recently noted in its 2012 Census (http://shopping.ebay.in/census/statistics/averageDay.php) that it enables transactions at the rate of about 1 per minute. That's for smaller items like mobile accessories and beauty products.
Snapdeal, meanwhile, was first established in 2010 as a daily deals site but more recently, in 2012, moved into a marketplace model — similar to the one built out by eBay and Amazon, offering a platform for merchants to sell goods. This model has proven particularly successful in emerging markets where there are a lot of small businesses but a relatively young e-commerce landscape: a vacuum for those who come in to offer a platform to take those small businesses online — one that others like Rocket Internet (http://techcrunch.com/tag/rocket-internet/) are also tapping.
Some of the verticals that Snapdeal has focused on include fashion, home goods, and consumer electronics and it now has 20 million users, or about 1 in every five Indian people who are online. It's expected that Snapdeal will generate about $400 million in sales in 2013 (http://timesofindia.indiatimes.com/tech/tech-news/internet/Snapdeal-expects-online-sales-to-touch-Rs-2000-cr-in-FY14/articleshow/19322065.cms). The company does not have any immediate plans to expand to countries outside of India, TechCrunch understands.
Overall, eBay already has a strong business outside of the U.S. In its analyst day last week, Wendy Jones, VP of geographical expansion and cross border trade, noted that 61% of its Marketplace revenue comes from non-U.S. markets.
Within that, the BRIC block of Brazil, Russia, India and China are playing a key role. Last week, eBay chose to hone in on Russia's role there: Jones called Russia eBay's number-one priority (https://twitter.com/ebayinc/status/317311383597375488) for expansion, partly because it now has the largest internet population in all of Europe (http://techcrunch.com/2013/03/28/global-it-spend-will-rise-4-1-to-3-8t-in-2013-with-mobile-and-enterprise-leading-the-way/), and partly because that population is still growing fast. For eBay in particular, Russian users bought $400 million in goods on the site in 2012 (https://twitter.com/ebayinc/status/317311914579488768), growing by 54% over 2011.
But that is also growing beyond Russia: eBay believes (https://twitter.com/ebayinc/status/317311914579488768) that 25% of total active users, and 12% of global sales will be coming from the BRIC block by 2015. Within that eBay says it wants (https://twitter.com/ebayinc/status/317310738836377603) to build out active users in BRIC and emerging markets 6.5-fold.
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Via: TechCrunch