mergers and acquisitions in e-commerce and its impact on indian economy
TRANSCRIPT
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Mergers and Acquisit ions by Indian companies in E-
commerce Industry and its Impact on Indian Economy
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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.
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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
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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
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MERGER AND ACQUISITIONS
IN ECOMMERCE - eTourism
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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)
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Ibibo Journey – 2009 to 2014
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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.
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Contd..• Compounded Annual Growth Rate - 38% increase
from 2009 to 2014.• Sales analysis:
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Flipkart And Myntra
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Overview
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Win-Win Situation
Growing Apparels SectorLogistic AdvantageExpansion For FlipkartFighting Competition
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Impact Of The Merger
Message to Indian rupee investorsOpen up multi brand FDIInvestors ActivismEmploymentForcing retailer to sell at low priceBalance of payment
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FDI In Retail
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Imports In Retail Sector
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Some major Imports
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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.
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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
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“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.
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Sector has been constantly attracting huge investment.
Government decision to disallow FDI in ecommerce to help Indian e-commerce firms.
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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
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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
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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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Thank You