India has around 500 e-commerce firms, of which 40 have got funding and 10 have gained traction
Mumbai: Early-stage venture capital firm IDG Ventures India has invested $3 million in eShakti.com Pvt. Ltd, an online Western fashion retailer in the US, for a minority stake.
Chennai-based eShakti, which makes customized, designer clothes for women, started exports to the US in 2008. It plans to use the money to scale up operations, add new product lines and also cater to Indian consumers.
“Over the next six months, we will add accessories—belts, bags, jewellery, which would complement our clothes,” said B.G. Krishnan, founder and chief executive of eShakti.com. The company may look at yet another round of fund-raising next year, he said, but declined to reveal how much stake has been sold to Bangalore-based IDG Ventures.
Krishnan, who is working on the launch of the firm’s Indian brand Zapelle, said getting the fit right is paramount for the success of an their offering.
There is a large part of the market which takes plus sizes, and even among regular sizes, body shapes differ, Krishnan said, adding that the market is unable to cater to these widely varied sizing needs. “A large part of the market is underserved. That’s why we decided to get into this market. Our value proposition is customization—easy, affordable, and fast.”
T.C. Meenakshisundaram, managing director of IDG Ventures India, who will be on the board of the firm, said there are very few companies in the online customized and personalized Western wear segment in India. “The ability that they have shown by gaining traction in a rather difficult and competitive market like the US has been a comforting factor for us. We believe their uniqueness will give them a competitive advantage,” he said.“The India market is showing an appetite for global fashion, and online shopping also is growing rapidly. In the US, we are positioned between budget and moderate and we will look at similar positioning in India also.”
E-commerce firms have been the favourite of venture capital firms this year. Investments in such firms between January and August more than doubled over the year-ago period to $137 million across 21 deals, according to Venture Intelligence, a financial research platform. The figure was $55 million across 12 deals in the same period in 2011.
India is estimated to have close to 500 e-commerce firms, of which 40 have received funding and 10 have gained traction. E-commerce in India is expected to grow 47% in 2011 to Rs. 46,520 crore by the year-end, according to a report by the Internet and Mobile Association of India. Online retail will account for 6%, or Rs. 2,700 crore, of the market.
Ashish Sinha, founder of PluGGd.in, which tracks start-ups and new business models, said more and more e-commerce firms are deviating from a niche offering to an “offer all” approach. “When it comes to niche categories, you cannot grow the segments exponentially. That’s why people prefer doing everything.”
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