mergers and acquisitions in e-commerce and its impact on indian economy

Mergers and Acquisit ions by Indian companies in E-

commerce Industry and its Impact on Indian Economy

Grown by almost 35% from 3.8 billion in 2009 to an estimated 12.6 billion in 2013

The size of the e-retail industry is poised to be

10 to 20 billion USD by 2017-2020.

Increased consumer-led purchases in durables and electronics.

A steep rise in the number of smartphone users. Increased internet access and the ever dropping rates

of internet surfing. Lack of time. Increased use of plastic money. A greater percentage of new users coming from Tier

II and Tier III cities.

Reasons for rise in e-commerce

Reasons for Mergers and Acquisit ions

• To limit competition• Utilize under utilized market power• In crease the value of combined enterprise• Diversification• Maximize firm’s value

MERGER AND ACQUISITIONS

IN ECOMMERCE - eTourism

Ibibo-Redbus Acquisit ion• Goibibo (one of the top 3 online travel aggregator in India) -

part of ibiboGroup owns India's No 1 online Bus ticketing platform, redBus.in

• Redbus acquired by Ibibo at $100-120 million (Rs 598-712 crore at current rates)

Ibibo Journey – 2009 to 2014

Impact and effects of M&A in online travel industry

• India’s travel and tourism industry is expected to grow by 7.3 per cent in 2014,

outperforming the general economy by 2.5 percentage points - The World Travel and Tourism Council-annual economic impact report

• Convenience to the consumers

• Growing Economy • Rise in income and employment • Online Travel industry in India is growing faster than other non-travel

industries l ike E-tai l ing, f inancial services, classif ieds and other services.

• Indian Internet companies can at tract buyers from overseas

• Affirmation of the growing acceptance of Indian consumer Internet companies globally.

Contd..• Compounded Annual Growth Rate - 38% increase

from 2009 to 2014.• Sales analysis:

Flipkart And Myntra

Overview

Win-Win Situation

Growing Apparels SectorLogistic AdvantageExpansion For FlipkartFighting Competition

Impact Of The Merger

Message to Indian rupee investorsOpen up multi brand FDIInvestors ActivismEmploymentForcing retailer to sell at low priceBalance of payment

FDI In Retail

Imports In Retail Sector

Some major Imports

IMPACT OF E- COMMERCE ON THE INDIAN ECONOMY

E-commerce – a proven haven for India’s economic growth.

The e-commerce sector has been growing at a breakneck pace.

Online travel, the current major contributor to the b2c segment’s sales.

Online retail division to continue to offer immense scope.

 Sector enjoys larger revenue contribution from tier i, ii and iii cities.

Anticipated growth in internet accessibility backbone for the Indian e-commerce landscape

“On-the-go” shopping formula need of the day.

Indians becoming more aware and embracing the idea of shopping online.

Numerous customized features have been added to the

e-commerce sector.

Sector has been constantly attracting huge investment.

Government decision to disallow FDI in ecommerce to help Indian e-commerce firms.

Impact -

• Kirana Stores- Strong source of employment• Apparel Sector- Acts as complimentary• Travel Agents- 76% of all online transactions

are travel related• Logistics Sector- Accounts for 15-20% of the

total revenue

Scope of E-Commerce in India

• Comparison with other countries China-220 Million, US- 150 Million, India- 137 Million ( 18% of population)

• Growing awareness amongst customers• Opportunity to penetrate the market- Tier 2, Tier 3 Cit ies

• Reduction in consumer’s search cost No longer restricted to store hours

• Employment Opportunity Est imated to create 1 mil l ion jobs by 2020

Bibliography : • Indian Tourism (2011) Indian Tourism Statistics, [Online], Available:

http://tourism.gov.in/writereaddata/CMSPagePicture/file/Primary%20Content/MR/pub-OR-statistics/2011statisticsenglish.pdf

• WTTC (2011) World Travel and Tourism Council, [Online], Available: http://www.wttc.org/site_media/uploads/downloads/traveltourism2011.pdf

• MITI’s Proposal for WTO E-Commerce Initiative, “Towards eQuality: Global E- Commerce Presents Digital Opportunity to Close the Divide Between Developed and Developing Countries (2nd Draft)”, http://wwwmeti.go.jp

• Tactful Management Research Journal - MERGER AND ACQUISITION IN

E-COMMERCE SECTOR : Vol. 2 | Issue. 8 | May 2014 - ISSN :2319-7943

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