Shake-out in e-commerce space

The closure of various companies has prompted consumer worry over delayed orders

April 11, 2013 12:26 am | Updated 12:26 am IST - CHENNAI:

The last two weeks have seen nearly 15 e-tailers either shut shop, integrate with their parent companies or forced to merge with a rival. This has promoted consumer worry over delayed orders and thrown into question the profitability of the nascent e-commerce sector.

Children-focused e-tailer Wopshop and event-ticketing site eventNu shut down hastily last week, shutting down their respective websites without informing customers.

According to sources, e-commerce firm SeventyMM, which had raised over $20 million from NEA-Indo US Ventures last year, is also likely to close shop in the coming weeks after failing to raise another round.

“I’d have to say it was mainly due to a lack of available capital as well as a completely saturated market that forced us to shut down. There were about 15 other companies like us doing the same thing, and we weren’t able to convince investors that we had a differentiated proposition,” said Viswa Vivek Garg, Founder, eventNu.

At the other end, however, are companies being forced to merge or integrate with rivals that have common investors.

For instance, Buytheprice.com was forced to merge with Naspers-owned marketplace Tradus last week—nearly a year after Naspers had invested $10 million in Buytheprice.

The e-commerce firm, which had recently appointed a new CEO, informed its customers that it was now part of Tradus, without giving details on the status of current orders.

In the coming weeks, similar deals are in the offing, with Bangalore-based Hoopos planning to merge with online baby care products retailer Babyoye, according to multiple sources.

“The deal is being discussed amongst the multiple existing investors, Accel Partners and Tiger Global, in order to create a stronger entity that will have a chance against market leader Firstcry,” a source said.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.