Online e-commerce giant eBay last week said that it expects to have 12% of its sales coming from BRIC countries by 2015 in a global e-commerce market that will be worth $300 billion, and here is one more step in that strategy: it is leading a $50 million, Series C investment in Snapdeal, an online marketplace in India with 20 million users. Existing backers Nexus Venture Partners, Bessemer Venture Partners and IndoUS Venture Partners also participated.
The news was first reported by Indian tech blog NextBigWhat, 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 in funding since 2010, with the previous two investments being $12 million in January 2011, and $40 million in September 2011.
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 about 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, but that only has 5 million users. Ebay India recently noted in its 2012 Census 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 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. 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 for expansion, partly because it now has the largest Internet population in all of Europe, 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, growing by 54% over 2011.
But that is also growing beyond Russia: eBay believes 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 to build out active users in BRIC and emerging markets 6.5-fold.
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